nioemttj  of 


INDUSTRIAL   INSURANCE 
IN   THE  UNITED  STATES 


INDUSTRIAL  INSURANCE 
IN  THE  UNITED  STATES 


BY 

CHARLES    RICHMOND    HENDERSON 


UNIVERSITY 

OF 


CHICAGO 
THE  UNIVERSITY  OF  CHICAGO  PRESS 

LONDON 

T.  FISHER  UNWIN,  1  ADELPHI  TERRACE 
1909 


COPTEIGHT  1908  B? 

THE  UNIVERSITY  or  CHICAGO 


Published  January  1909 


Printed  By 

The  University  of  Chicago  Press 
Chicago,  Illinois,  U.  S.  A. 


PREFACE 

The  present  volume  is  substantially  an  English  version  of 
Die  Arbeiter-Versicherung  in  den  Vereinigten  Stoat  en  von 
Nord- America.1  Considerable  new  material  has  been  added; 
but  the  movement  is  now  so  rapid  that  before  proofs  can  be 
read  new  and  important  events  may  occur.  In  preparing 
this  volume  the  statistics  used  have  been  compared,  as  far 
as  possible,  with  the  primary  sources.  It  is  difficult  to  avoid 
errors,  and  the  author  will  be  grateful  for  corrections. 

The  summary  of  European  laws  is  added  in  order  to 
indicate  the  various  tendencies  of  thought  and  activity  in 
this  field.  Imitation  of  foreign  measures  is  impossible,  but 
each  scheme  may  suggest  a  new  starting-point  for  American 
legislation.  In  the  Appendix  will  be  found  the  regulations 
of  several  important  schemes  of  insurance  which  have  been 
drawn  up  by  actuaries,  with  the  best  legal  and  business 
advice.  Some  of  these  plans  have  already  endured  severe 
tests  in  practice. 

1  Published    by    A.    Troschel,    Berlin,    1907,    as    Heft    XVII    of    Dr. 

Zacher's  Die  Arbeiter-Versicherung  im  Auslande.  The  publisher  and 
editor  of  that  series  graciously  gave  permission  to  publish  an  English 
edition. 


189788 


SPREGKELS 


TABLE  OF  CONTENTS 

PAGE 

SUMMARY  OF  EUROPEAN  LAWS  ON  INDUSTRIAL  INSURANCE      .       .  i 

CHAPTER  I.    THE  EXTENT  AND  NATURE  OF  THE  DEMAND  FOR  A 
SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE  IN  THE  UNITED 

STATES 41 

CHAPTER  II.    LOCAL  RELIEF  SOCIETIES      ......  63 

CHAPTER  III.    BENEFIT  FEATURES  OF  THE  TRADE  UNIONS    .       .  84  — 

CHAPTER  IV.    THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES      .  112 

CHAPTER  V.    THE  EMPLOYERS'  LIABILITY  LAW       .       .       .       .  128  «*- 

CHAPTER  VI.    PRIVATE   INSURANCE   COMPANIES:    " INDUSTRIAL 

INSURANCE"  AND  "CASUALTY"  COMPANIES        ....  149 

CHAPTER  VII.    FIRMS  AND  CORPORATIONS 190 

CHAPTER  VIII.    INSURANCE  PLANS  OF  RAILWAY  CORPORATIONS    .  212 

CHAPTER  IX.    MUNICIPAL  PENSION  SYSTEMS  AND  PENSIONS  FOR 

TEACHERS 251 

CHAPTER  X.    THE  PENSION  SYSTEMS  OF  THE  UNION  AND  OF  THE 

SEVERAL  STATES 273 

CHAPTER  XI.    PROTECTIVE  LEGISLATION 288 

CHAPTER  XII.    SURVEY  AND  OUTLOOK 307 

APPENDIX  A.    BIBLIOGRAPHY 323 

APPENDIX  B.    COMMON  CARRIERS'  LAW  (FEDERAL)        .       .       .  32.7 

APPENDIX  C.    FEDERAL  COMPENSATION  LAW 330 

APPENDIX  D.    ILLINOIS  BILL 333 

APPENDIX  E.    CASUALTY  COMPANY  CONTRACTS        ....  339 
APPENDIX  F.    AGREEMENT  OF  LARGE  FIRMS    .     . .       .       .       -345 

APPENDIX  G.    SWIFT  &  Co.  PLAN 355 

APPENDIX  H.    INTERNATIONAL  HARVESTER  COMPANY  PLAN   .       .  377 

APPENDIX  J.     MODEL  CONSTITUTION  AND  BY-LAWS  FOR  MUTUAL 

BENEFIT  ASSOCIATIONS 395 

vii 


TABLE  OF  CONTENTS  viii 

PAGE 

APPENDIX  K.    PLAN  OF  SCOTTDALE  IRON  AND  STEEL  WORKERS' 

ASSOCIATION 402 

APPENDIX  L.    PLAN  OF  STUDEBAKER  BROS.  MFG.  Co.        .       .  410 

APPENDIX  M.    PLAN  OF  THE  UNIVERSITY  OF  CHICAGO  PRESS 

MUTUAL  BENEFIT  ASSOCIATION 416 

APPENDIX  N.    THIRTEENTH  BIENNIAL  REPORT  OF  THE  BUREAU 

OF  LABOR  AND  INDUSTRIAL  STATISTICS  (1908)    ....  423 

APPENDIX  O.    LAWS  OF  MASSACHUSETTS,  1908,  chap.  489     .       .  428 


SUMMARY  OF  EUROPEAN  LAWS  ON  INDUS- 
TRIAL INSURANCE1 

The  book  of  Willoughby  on  Workingmen's  Insurance 
represented  the  situation  in  Europe  and  America  up  to  1898, 
Since  then  great  progress  has  been  made,  and  it  is  desirable 
to  give  a  brief  sketch  of  the  essential  facts  in  relation  to 
existing  systems.2 

GERMANY 

In  Germany  there  are  two  forms  of  sickness  insurance  of 
workingmen,  compulsory  and  optional.  According  to  the 
imperial  law  of  1883,  with  its  subsequent  amendments  up  to 
1903,  all  workmen  and  employees  with  an  annual  income 
up  to  2000  marks  ($480),  engaged  in  manufactures  or 
trade,  must  be  insured.  By  special  regulations  this  require- 
ment may  be  extended  to  agriculture  and  household  indus- 
tries. Many  employees  in  excepted  classes  are  permitted 
to  insure  themselves  who  are  not  required  to  do  so.  In  the 
year  1906  the  German  Empire  had  sixty-one  and  two-tenths 
million  inhabitants,  of  whom  fifteen  and  four-tenths  million 
were  wage  earners.  For  these  there  were  22,940  funds  or 
insurance  associations,  with  twelve  and  four-tenths  million 
members;  $72,240,000  premiums  paid,  or  $5.76  per  person 
insured;  $63,840,000  were  paid  out,  or  $13.20  per  sick  per- 
son and  $.67  per  day  of  sickness.  The  form  of  insurance  is 
the  local  insurance  association  based  on  the  principles  of 
mutual  help  and  self-government,  under  the  general  law. 

1This  summary,  prepared  for  Charities  and  the  Commons,  is  repro- 
duced here  by  permission  of  the  editors  with  some  additions. 

2 1  have  used  chiefly  Zacher,  Leitfaden  zur  Arbeiterversicherung, 
1908,  and  the  report  of  the  International  Workingmen's  Insurance  Congress 
of  Vienna,  1905,  and  of  Rome,  1908. 


2  INDUSTRIAL  INSURANCE 

In  these  local  associations  the  workmen  pay  two-thirds  of 
the  premiums  and  the  employers  one-third  of  the  premiums, 
which  are  based  on  the  rate  of  wages.  There  are  also  free 
associations  for  insurance  in  which  the  employers  have  no 
share. 

The  benefits  received  under  the  law  are:  (a)  Free  treat- 
ment and  sickness  money  (50  per  cent,  of  the  average 
wages) ;  or,  free  treatment  in  a  hospital  and  one-half  the 
sickness  money  paid  to  dependent  relatives  for  twenty-six 
weeks;  (b)  lying-in  women  receive  at  the  same  rate  during 
six  weeks;  (c)  death  benefit  of  twenty  times  the  wage  of 
one  day.  The  indemnities  seem  small  when  given  in  Ameri- 
can money ;  their  actual  value  in  Europe  is  much  higher  than 
the  amounts  appear  to  offer.  By  special  enactments  this 
minimum  scale  of  benefits  may  be  raised.  In  case  of  dispute 
the  matter  is  settled  by  a  supervisory  board  without  costs 
for  litigation. 

Accident  insurance  was  introduced  in  Germany  by  the 
law  of  1884-87,  revised  in  1900.  Insurance  is  compulsory 
for  all  workmen  and  foremen  with  annual  earnings  under 
3,000  marks  ($720),  in  manufactures  and  agriculture.  By 
special  enactment  it  may  be  extended  to  foremen  and  petty 
employers  with  more  than  3,000  marks  ($720).  Employers 
and  other  persons  not  required  to  insure  are  permitted  to 
insure  themselves  under  the  same  scheme.  If  an  accident 
has  been  wilfully  caused  by  the  employer  he  can  be  sued 
criminally  under  the  old  liability  law  of  1871  and  obliged  to 
pay  the  indemnity  fixed  by  that  law,  less  the  amount  paid 
by  his  insurance  association.  Such  suits  are  rare,  as  the 
process  is  long  and  doubtful  and  the  ordinary  insurance  is 
adequate  and  easily  collected  without  suit.  Employers  are 
permitted  to  insure  themselves  in  their  own  associations 
against  this  liability.  The  insurance  is  effected  by  means  of 
insurance  associations  of  employers  (of  which  there  were, 'in 


LAWS  ON  INDUSTRIAL  INSURANCE  3 

1906,  114  having  5,400,000  establishments  and  19,200,000 
workmen)  in  the  same  or  similar  trades,  organized  on  the 
principles  of  mutuality  and  self-government.  There  are 
special  organizations  for  those  engaged  in  the  state  service, 
railroads,  telephones,  etc.  The  premiums  are  paid  by  assess- 
ments on  the  employers  levied  according  to  the  total  wages 
paid  and  the  scale  of  risk  in  the  trade  and  establishment. 
This  arrangement  makes  it  to  the  interest  of  individual  em- 
ployers to  guard  against  accidental  injuries.  They  hardly 
need  factory  inspectors  to  keep  them  to  this  duty.  The 
benefits  offered  under  this  law  are:  (a)  The  benefit  begins 
after  the  sickness  insurance  stops,  but  in  any  case  not  later 
than  the  fourteenth  week  of  incapacity;  free  treatment  and 
accident  benefit  up  to  66%  per  cent,  of  the  average  annual 
earnings,  or  free  hospital  treatment  together  with  pension  to 
dependent  relatives,  up  to  60  per  cent,  of  earnings;  (b) 
death  benefit  of  twenty  times  the  daily  wages  and  pension  to 
dependent  relatives  up  to  60  per  cent,  of  daily  wages.  Bene- 
fits are  paid  in  case  of  any  sort  of  accident  without  litigation 
over  questions  of  "negligence"  of  employee,  unless  the  in- 
jured person  has  purposely  brought  the  injury  on  himself. 
In  case  of  controversy  the  dispute  is  settled  without  expense 
to  the  parties  by  an  arbitration  court  and  by  the  imperial 
insurance  authorities,  the  workmen  and  employers  being 
equally  represented.  Premiums  paid  in  1906  were  $40,- 
080,000;  average,  $2.18  per  insured.  Expenditures,  $34,- 
368,000  to  854,680  injured,  and  to  73,999  widows,  103,564 
children,  3,882  parents  of  those  killed. 

Invalid  arjLdjQ_ld-a^_rjejisiojis_were  introduced  in  Germany 
by  the  law  of  1889,  improved  in  1899.  All  wage  earners 
with  annual  earnings  less  than  $480  are  required  to  be  in- 
sured, and  the  imperial  council  can  extend  this  insurance  to 
petty  employers  and  persons  in  household  industry.  Pro- 
vision is  also  made  for  optional  insurance  of  workmen  and/ 


4  INDUSTRIAL  INSURANCE 

petty  employers  not  included  in  the  compulsory  clause.  The 
invalid  pension  insurance  is  effected  through  organizations 
covering  different  territories  and  these  also  are  mutual  in 
character  and  self-governing  under  the  general  law.  Spe- 
cial funds  are  erected  for  miners  and  state  railway 
employees.  The  premiums  are  paid  by  employers  and  em- 
ployees, one-half  each,  and  the  empire  adds  $12  annually  to 
each  pension  paid.  The  benefits  paid  are:  (a)  Invalid 
pensions  for  persons  incapacitated  for  labor,  after  they  have 
paid  premiums  for  200  weeks;  (b)  old-age  pensions  for 
members  over. seventy  years  of  age,  after  paying  premiums 
1,200  weeks;  (c)  free  treatment  in  addition  to  aid  to  de- 
pendent relatives,  in  order  to  prevent  incapacity  for  work; 
(d)  repayment  of  premiums  in  case  of  death,  accident,  or 
marriage,  if  the  pension  has  not  yet  fallen  due.  In  case  of 
controversy  the  dispute  is  settled,  without  cost  to  the  parties, 
before  an  arbitration  court  and  the  imperial  insurance 
bureau,  both  workmen  and  employers  having  their  repre- 
sentatives. The  statistics  of  1906  showed  that  there  were 
forty  invalid  pension  organizations,  with  fourteen  and  one- 
tenth  million  insured  members.  The  premiums  paid  were 
$40,800,000 — $2.88  per  member — and  $39,840,000  were 
paid  in  pensions, — the  average  invalid  pension  being  $39.12 
and  the  old-age  pension  $38.64,  varying  in  amount  with  the 
wage  class.  Out  of  fifteen  million,  four  hundred  thousand 
workmen,  fourteen  and  one-tenth  millions  were  insured. 

Already  Germany  is  working  out  laws  and  plans  for 
securing  income  to  widows  and  orphans  and  for  the  unem- 
ployed. Unquestionably  Germany  leads  the  world  in  indus- 
trial insurance,  and  has  prospered  while  she  built  up  the 
system,  probably  largely  in  consequence  of  it. 

Before  1881  Germany  depended  upon  employers'  liability 
laws,  voluntary  benefit  societies,  and  private  casualty  com- 
panies for  the  protection  of  her  workingmen  against  beggary 


LAWS  ON  INDUSTRIAL  INSURANCE  5 

in  times  of  disability.  When  the  workingmen  become 
conscious  of  their  wrongs  and  united  in  a  desperate  effort  to 
overthrow  a  government  which  seemed  indifferent  to  their 
sufferings  and  hostile  to  their  aspirations,  they  were  held  for 
a  time  in  subjection  by  the  iron  hand  of  Bismarck,  under  the 
anti-socialistic  laws  which  sought  to  suppress  discussion.  It 
became  evident  that  this  would  eventually  provoke  open  re- 
bellion and  revolution.  The  most  objectionable  laws  were 
repealed  and  in  their  stead  a  national  policy,  based  on  the 
duty  of  a  people  to  care  for  all  its  citizens,  was  announced. 
On  November  17,  1881,  Emperor  William  I,  by  the  hand  of 
Prince  Bismarck,  sent  to  the  Reichstag  his  famous  message : 

We  regard  it  as  our  imperial  duty  once  more  to  lay  upon  the  heart 
of  the  Reichstag  the  promotion  of  the  welfare  of  the  workmen,  and 
we  would  look  back  with  all  the  more  satisfaction  on  all  the  successes 
with  which  God  has  visibly  blessed  our  reign,  if  we  might  carry  with 
us  the  consciousness  that  we  could  leave  behind  us  new  and  permanent 
assurance  of  inward  peace  and  to  those  who  need  help  greater  security 
and  comfort  to  which  they  have  a  claim.  In  our  efforts  directed  to 
that  end  we  are  sure  of  the  co-operation  of  all  the  federate  states  and 
we  look  for  the  support  of  the  Reichstag  without  regard  to  parties. 
First  of  all  to  this  end  a  sketch  of  a  law  relating  to  the  insurance  of 
workmen  against  loss  by  accidents  in  industry  has  been  prepared.  By 
its  side  and  supplementing  it  will  be  offered  a  method  of  organizing 
sickness  insurance  funds.  But  also  those  who  by  reason  of  age  or 
disability  have  become  unable  to  earn  a  living  have  a  well  founded 
claim  upon  the  community  for  a  larger  measure  of  state  care  than  has 
hitherto  been  given  them.  To  find  the  right  way  and  means  for  this 
care  is  a  difficult  task,  but  also  one  of  the  highest  duties  of  every  state 
which  rests  upon  the  Christian  life  of  the  people.  The  close  union 
of  the  real  forces  of  this  people's  life  with  incorporated  societies  under 
state  protection  and  state  help,  will,  as  we  hope,  make  possible  the 
solution  of  problems  for  which  the  power  of  the  government  alone 
would  not  in  the  same  degree  be  adequate. 

On  February  19,  1907,  Emperor  William  II,  in  his 
throne  speech  before  the  newly  elected  Reichstag  confirmed 
the  policy  of  his  grandfather,  saying : 


6  INDUSTRIAL  INSURANCE 

That  legislation  rests  upon  the  principle  of  social  duty  to  the 
working  classes  and  is  therefore  independent  of  parties.  The  federated 
states  are  firmly  decided  to  carry  out  this  social  work  in  the  exalted 
spirit  of  Emperor  William  the  Great. 

With  these  decisions  all  parties  in  Germany  are  now 
agreed  after  a  trial  of  nearly  a  generation;  and  this  unity  of 
purpose  has  been  attained,  in  spite  of  early  misgivings  and 
antagonisms,  because  of  the  manifest  advantages  of  the 
system.  Some  of  these  advantages  and  benefits  we  may 
briefly  summarize. 

It  is  sometimes  asserted — in  advance  of  proof — that 
accident,  sickness,  and  old-age  insurance  is  a  burden  upon 
the  capital,  industry,  and  commerce  of  a  nation.  As  Ger- 
many is  the  country  which  annually  does  more  than  other 
nations  in  this  direction  it  seems  not  unfair  to  mention  the 
fact  that  the  years  of  trial  of  her  system  of  insurance  have 
been  precisely  the  years  in  which  that  nation  has  forged  to 
the  front  rank  in  the  world  of  manufactures  and  commerce. 
The  nation  has  grown  rich  and  the  workingmen  have  im- 
proved their  condition  so  that  they  are  not  anxious  to  emi- 
grate as  formerly.  On  all  these  points  we  have  several 
recent  publications  which  reveal  the  situation  with  a  wealth 
of  statistical  evidence.3 

Wages  have  risen  more  rapidly  than  in  any  other  coun- 
try ;  the  insurance  premiums,  so  far  as  paid  by  the  employers, 
are  a  clear  addition  to  wages ;  in  times  of  sickness,  disability 
from  accident  or  old  age,  the  workman  has  a  legal  right  to 
honorable  maintenance,  and  so  the  degradation  of  charity  is 
avoided;  the  cost  of  accident  insurance  premiums  makes  it 
to  the  direct  and  manifest  interest  of  employers  to  use  all 
possible  protective  devices  to  prevent  injuries  and  diseases; 
the  administration  of  the  sickness  and  invalid  funds  takes 

3W.  J.  Ashley,  Progress  of  the  German  Working  Classes;  W.  H. 
Dawson,  The  German  Workman  (1906). 


LAWS  ON  INDUSTRIAL  INSURANCE  7 

care  to  provide  means  of  speedy  and  'effective  cure  of 
invalids;  the  committees  of  administration  bring  employers 
and  workmen  together  under  conditions  favorable  to  social 
conciliation;  and  in  every  direction  the  system  seems  to  have 
promoted  civilization  and  the  common  welfare.  The  defects 
in  details  are  carefully  studied  by  the  leading  men  of  the 
empire  and  will  gradually  be  corrected ;  the  methods  will  be 
unified  and  simplified;  and  in  the  near  future  the  benefits 
will  include  larger  pensions  to  widows  and  orphans  and 
some  kind  of  protection  to  the  temporarily  unemployed. 

It  is  sometimes  asserted  that  the  German  system  of 
workingmen's  insurance  is  nothing  better  than  a  disguised 
form  of  poor  relief,  a  kind  of  gift  from  above  paid  by  the 
government  at  the  expense  of  taxpayers  to  prevent  rebellion 
of  the  "lower  classes."  The  classic  message  of  the  emperor 
gives  a  more  just  interpretation  of  the  purpose  of  the 
"social  policy"  of  the  nation.  The  demand  is  made  on  the 
basis  of  the  duty  of  the  people  and  the  common  welfare, 
because  health,  security  and  freedom  from  dependence  are 
not  a  mere  class  interest  but  belong  of  right  to  all.  Those 
who  risk  the  greatest  danger  to  life  and  limb  should  not  be 
left  to  carry  the  entire  cost  of  that  hazard. 

Insurance  is  not  poor  relief  but  common  justice,  a 
method  of  fairly  distributing  the  extraordinary  costs  of 
civilization.  Since  such  insurance  never  has  been  made 
general  and  never  can  be  made  general  by  any  voluntary 
scheme,  the  government,  the  agent  of  the  common  intelli- 
gence, conscience  and  will,  intervenes  far  enough  to  enforce 
obligation,  to  regulate  the  method  and  to  insure  the  rights 
of  all  concerned.  Thus  in  the  United  States  the  govern- 
ment, under  the  right  of  eminent  domain,  takes  landed 
property  for  a  consideration  and  gives  it  to  railroads  for 
right  of  way  or  as  subsidy;  and  in  turn  prescribes  the  terms 
on  which  a  railway  corporation  can  enjoy  these  special 


8  INDUSTRIAL  INSURANCE 

privileges.  Thus  also  the  federal  government  grants  privi- 
leges to  certain '  banks  and  controls  the  method  of  their 
administration.  In  Germany  the  government  seeks  in  its 
insurance  laws  to  encourage  and  stimulate  the  interest  of 
both  the  employers  and  employees  in  the  system.  The  entire 
system  is  based  on  the  principles  of  mutual  benefit,  self- 
government  and  local  initiative.  Both  employers  and  em- 
ployees have  a  right  to  participate  in  the  administration  and 
judicial  application  of  the  law,  as  both  share  equitably  in 
the  cost.  It  is  not  state  insurance,  but  insurance  on  the 
basis  of  mutuality  and  self-government,  under  the  regulation 
of  law.  It  is  precisely  in  this  administration  that  the  work- 
ingmen  feel  themselves  to  be  free  agents  and  intelligent 
participants  in  the  affairs  of  their  country.  There  is  no 
taint  of  charity  from  first  to  last;  each  man  pays  his  share 
of  the  cost,  has  a  voice  in  the  control  and  can  set  up  a  legal 
claim  when  he  needs  his  benefits.  All  this  removes  the  in- 
surance system  by  the  diameter  of  the  moral  world  from 
poor  relief  and  private  charity. 

The  German  system  does  not  make  other  forms  of 
protection  superfluous,  since  it  simply  provides  for  the 
necessities  of  existence;  it  does  not  remove  the  motive  for 
forming  trade  unions  and  fraternal  societies,  nor  for  invest- 
ing in  extra  insurance  in  life  insurance  companies,  nor  for 
savings.  All  these  organizations  of  thrift  flourish  in  Ger- 
many. 

That  an  obligatory  or  compulsory  law  is  necessary  to 
bring  the  benefits  of  insurance  within  the  reach  of  those 
who  most  need  them  is  evident  in  the  fact  that  Germany, 
before  1883,  had  developed  its  voluntary  associations  for 
sick  benefits  in  a  very  remarkable  way,  and  yet  scarcely  half 
those  who  were  in  need  had  any  share  in  the  system.  Since 
the  law  of  1883  all  wage  earners  are  protected.  So  also  in 
case  of  accidents.  The  German  law,  before  1871,  was  quite 


LAWS  ON  INDUSTRIAL  INSURANCE  9 

as  strong  as  ours,  yet  scarcely  one-tenth  of -all  injured  work- 
men were  protected. 

The  exposition  at  St.  Louis,  in  1904,  brought  together 
under  one  roof  the  exhibits  of  social  economy  of  the  great 
nations.  No  one  could  fail  to  observe  the  pronounced  su- 
periority of  Germany  in  this  section.  There  were  indeed 
exhibits  made  by  American  employers  which  reflected  credit 
upon  them  for  their  individual  interest  in  their  men ;  but  all 
these  were  instances  of  exceptional  goodness  or  of  enlight- 
ened self-interest.  The  mines  showed  some  of  the  best 
machinery  for  getting  out  coal  and  ore,  but  only  inferior 
devices  for  protecting  the  life  and  health  of  the  men.  The 
display  of  the  United  States  was  marked  rather  by  confusion 
and  anarchy  than  by  unity,  order,  and  law.  Every  man 
was  a  law  unto  himself;  there  was  no  organic  system,  no 
universal  principle  of  action,  no  statistics  which  revealed 
equity  to  all.4  American  workmen  do  indeed  have  some- 
what higher  money  wages  than  German  workmen ;  but  their 
expenses  are  higher,  their  labor  is  more  intense,  and  when 
accident,  sickness,  or  old  age  overtakes  them  they  have  no 
security  of  support  save  charity  or  public  relief. 

The  German  insurance  system  has  already  developed  out 
of  its  curative  measures  a  whole  system  of  prevention  of 
accidents,  diseases  and  premature  invalidism.  The  power- 
ful and  closely  knit  organization,  with  its  immense  funds  on 
hand,  invests  money  to  reduce  the  cost  of  insurance  and 
restore  the  workingmen  as  speedily  as  possible  to  the  ranks 
of  producers;  Since  the  first  factor  in  production  is  the 
healthy  and  vigorous  laborer  this  expenditure  is  a  wise 
investment  and  brings  to  the  nation  a  high  rate  of  interest. 
The  whole  educational  influence  of  the  insurance  system  is 

*  See  Amtl.  Bericht  des  deutschen  Reichskomissars  filr  die  Welt- 
Ausstellung  in  St.  Louis,  1904,  Berlin,  1906,  pp.  516-518;  cited  also  by 
Dr.  Zacher,  in  Vorwort  zum  Band  IV,  Die  Arbeiterversicherung  im  Aus- 
lande,  p.  35. 


10  INDUSTRIAL  INSURANCE 

directed  to  diminish  the  frequency  of  accidents  and  sickness, 
to  combat  preventable  diseases  like  tuberculosis,  alcoholism, 
and  venereal  disorders,  and  to  improve  the  conditions  of  the 
habitations  of  the  wage  earners  and  their  families.  All  this 
grows  naturally  and  inevitably  out  of  compulsory  insurance 
and  cannot  in  anything  like  the  same  degree  arise  under  a 
voluntary  system  dependent  on  individual  caprice,  and 
without  legal  foundation. 

The  better  word  for  "compulsory"  insurance  is  "legal" 
or  "obligatory,"  or  "legally  obligatory,"  for  the  word  "com- 
pulsion" is  misleading.  No  insurance  law  can  be  enacted 
by  the  legislation  of  a  free  people  and  successfully  enforced 
against  the  selfishness  of  exceptional  individuals  until  it  has 
first  been  accepted  by  the  reason,  the  conscience  and  the 
choice  of  that  people,  whether  of  a  commonwealth  or  a 
nation.  When  a  law  .is  thus  the  expression  of  a  deliberate 
social  policy,  accepted  after  investigation  and  discussion, 
it  is  an  act  of  social  co-operation  on  the  part  of  the  entire 
community.  It  becomes  legally  obligatory  on  all  in  order 
that  the  small  minority  of  egoists  may  not  defeat  the  will 
of  the  people,  in  order  that  all  competitors  may  be  placed  on 
a  common  level,  in  order  that  duties  and  benefits  may  be 
accurately  defined,  in  order  that  costs  of  performance  of 
duties  may  be  calculated  in  advance  and  adequately  provided 
for  in  budgets  of  individuals,  corporations,  and  political 
organizations. 

Our  system  of  "free"  schools  is  felt  to  be  "compulsory" 
only  when  a  taxpayer  is  exceptionally  stupid  or  selfish.  Our 
taxation  for  roads,  bridges,  lighting  of  streets,  water  works, 
police,  public  sanitation  is  not  felt  as  compulsion  by  the 
ordinary  normal  citizen  who  knows  that  for  every  dollar 
he  contributes  according  to  law  and  in  the  ratio  of  his  ability 
the  community  of  which  he  forms  a  part  will  enjoy  a  corres- 
ponding advantage. 


LAWS  ON  INDUSTRIAL  INSURANCE  II 

TABLE  OF  GERMAN  INSURANCE 

Sickness  Insurance  (since  1885}:  Marks 

Sickness  payments 1,114,629,489= $267,500,077. 36 

Physicians 514,803,920=  123,552,940.80 

Medicines,  etc 402,757,651=     96,661,836.24 

Hospitals 303,061,148=     72,734,675.52 

Death  benefits 83,763,839=     20,103,321 . 36 

Lying-in-women 36,543,672=      8,770,481 . 28 

Various  benefits 38,414,074=      9,219,377 . 76 

1888-1904 2,493,973,793=%98,553,7I°-32 

1905 250,000,000=     60,000,000 .  oo 

In  round  numbers  (1905) 2, 744,000, 000= $65 8,560,000 .00 

"      "           "        (1907) 3,298,000,000=°  790,520,000.00 

Accident  Insurance  (since  1885):  Marks 

Accident  benefits 759,1 72,928=$i82,2oi,502 . 72 

Payments  to  dependents  of  deceased  ..  191, 777,559=     46,026,614.16 

Medical  care 34,275,716=       8,226,171.84 

Hospitals 55,°IO>333=     i3>202>479  -92 

Death  benefits 6,927,990=       1,662,717.60 

Widows 7,747,570=       1,859,416.80 

Foreigners 2,846,489=         683,157 .36 

1885-1904 i,o57,758,585=$253,862,o6o.4o 

1905 ..- 136,000,000=  32,640,000.00 

In  round  numbers i,i94,ooo,ooo=$286,56o,ooo.oo 

"        (1907) 1,488,000,000=  359,120,000 .00 

Invalid  and  old-age  pensions  (since  i8pi):  Marks 

Invalid  pensions 560,486,961 =$134,516,870. 64 

Old-age  pensions 336,472,378=     80,753,370.72 

Medical  care 55,37I,747=     *3,389,2I9-28 

Return  of  premiums  (a)  at  marriage. .  38,025,117=      9,126,028.08 

Return  of  premiums  (ft)  at  death 13,422,508=      3,221,401 .92 

Return  of  premiums  (c)  at  accident...  171,201=           41,088.24 

1891-1904 1,003,949,91 2 =$240,947,878. 88 

1905 162,000,000=     38,880,000.00 

In  round  numbers i,i66,ooo,ooo=$279,84o,ooo  .00 

(1907) 1,500,000,000=  360,000,000.00 


12  INDUSTRIAL  INSURANCE 

If  the  German  people  really  felt  that  their  insurance  laws 
were  "compulsory"  in  the  sense  of  being  oppressive,  injuri- 
ous or  excessively  costly,  those  laws  would  at  once  be 
abrogated ;  for  the  German  people  are  among  the  most  free, 
politically,  on  earth,  and  have  an  imperial  legislature  whose 
members  are  elected  by  universal  manhood  suffrage.  It  is 
only  our  national  vanity  which  makes  us  think  of  Germans 
as  being  under  an  absolutist  and  oppressive  government. 

At  the  end  of  1907  in  all  about  eighty-one  million  per- 
sons (sick,  injured,  invalids  and  their  dependents)  had 
received  six  and  three-tenths  billion  marks  ($1,512,000,000) 
in  benefits.  The  workmen  have  contributed  less  than  half  the 
premiums  and  have  received  two  billion  marks  ($480,000,- 
ooo)  more  than  they  have  paid  out.  Property  is  owned  to 
the  amount  of  2,000,000,000  marks  ($480,000,000),  of 
which  almost  624,000,000  marks  ($149,760,000)  have  been 
invested  in  workmen's  dwellings,  hospitals  and  convalescent 
houses,  sanatoriums,  baths,  and  similar  institutions  of  wel- 
fare.5 

AUSTRIA 

The  Austrian  system  resembles  the  German  but  differs 
in  important  particulars  and  is  not  so  fully  developed. 

Sickness  insurance  is  compulsory  for  workmen  and  fore- 
men in  manufactures,  and  optional  with  employees  in  agri- 
culture and  household  industries  (law  of  1888).  Insurance 
is  effected  by  means  of  local  sick  insurance  associations  on 
a  basis  of  mutuality  and  self-government.  The  premiums 
are  paid  two-thirds  by  workmen  and  one-third  by  employers 
in  percentage  of  wages.  The  benefits  afforded  are  free 
treatment  and  sickness  pension,  or  free  hospital  treatment 
and  benefits  to  dependent  relatives.  The  period  of  relief 
is  twenty  weeks,  and  the  benefits  are  not  to  exceed  60  per 

6  From  Zacher,  Leitfaden  zur  Arbeit erversicherung  des  Deutschen 
Reiches,  1908. 


LAWS  ON  INDUSTRIAL  INSURANCE  13 

cent,  of  the  locally  customary  wages.  The  death  benefit  is 
twenty  times  a  day's  wages.  An  arbitration  court  decides 
disputes  without  cost.  Contrast  this  feature  of  the  German 
and  Austrian  laws  with  the  tedious,  bitter  and  costly  suits 
for  damages  in  negligence  cases  in  the  United  States ! 

The  Austrian  statistics  for  1905  showed  twenty-seven 
and  three-tenths  million  inhabitants  of  whom  ten  million 
were  wage  earners.  There  were  2,934  insurance  associa- 
tions, with  two  and  eight-tenths  million  members.  The 
premiums  were  forty-eight  million  marks  ($11,520,000), 
average  of  16.2  marks  ($4.05),  and  the  expenditures  forty- 
three  and  seven-tenths  million  marks  ($10,488,000)  or 
37.5  marks  ($9.00)  per  insured  person  and  1.70  marks 
($.40)  per  day  of  sickness. 

Accident  insurance  is  compulsory  (laws  of  1887,  1894) 
for  workmen  and  foremen  in  manufactures  with  annual 
earnings  less  than  2,000  marks  ($480),  and  this  includes 
agricultural  workmen  when  inanimate  power  is  applied  to 
farm  machinery.  Employers  and  workmen  not  obliged  to 
insure,  are  permitted  to  insure  themselves  in  the  same  funds, 
if  the  income  does  not  exceed  2,000  marks  ($480)  wages 
per  year.  The  Austrian  system  includes  all  the  industries  of 
a  given  territory  in  an  insurance  fund;  in  this  it  differs 
from  the  German  system,  under  which  the  associations  are 
composed  of  employers  of  the  same  industry,  without  re- 
gard to  their  territory;  the  Austrian  railway  funds,  how- 
ever, are  naturally  organized  by  trades.  In  another  respect 
the  Austrian  system  differs  from  the  German;  for  the 
premiums  are  paid  into  a  fund  (Kapitaldeckung) ,  whereas 
the  German  law  provides  for  assessments.  In  Austria  the 
employers  pay  90  per  cent,  and  the  employees  10  per  cent 
of  the  cost,  while  in  Germany  the  employers  pay  all.  The 
rates  vary  with  wages  and  degree  of  trade  risk.  The 
benefits  are  pension  (up  to  60  per  cent,  of  wages)  after  the 


14  INDUSTRIAL  INSURANCE 

fifth  week;  pension  to  the  dependent  relatives  of  a  dead 
workman,  up  to  50  per  cent,  of  wages,  and  death  benefit 
up  to  42  marks  ($10.08).  All  accidents  are  indemnified, 
as  in  Germany,  without  need  to  prove  negligence.  Arbitra- 
tion courts  settle  disputed  cases  without  cost.  In  1905  there 
were  seven  territorial  accident  insurance  funds,  with  408,622 
establishments  insuring  two  and  eight-tenths  million  work- 
men. The  premiums  paid  were  twenty-eight  and  eight- 
tenths  million  marks  ($6,912,000),  (10.3  marks,  $2.47 
per  insured),  and  nineteen  and  two-tenths  million  marks 
($4,608,000)  were  paid  out  to  62,968  injured  employees 
(having  7,475  widows,  10,247  children,  806  parents). 
Austria  has  no  general  old-age  pension  law  as  yet,  but  the 
movement  to  establish  one,  carried  on  since  1891,  promises 
speedy  relief.  In  1889  a  law  made  old-age  pensions  for 
miners  obligatory,  and  this  includes  about  150,000  men. 
The  employers  pay  half  of  the  premiums  and  the  employees 
half.  The  invalid  pension  is  on  the  average  200  marks 
($48)  for  full  benefit  and  146  marks  for  others;  widows 
and  orphans  may  claim  a  pension  up  to  three-quarters  the 
rate  first  named.  Arbitration  courts  settle  disputes. 

HUNGARY 

This  interesting  country  whose  intelligent  people  know 
much  of  the  United  States  and  are  ambitious  to  be  in  the 
front  rank  of  enlightened  peoples,  is  working  out  a  system 
of  industrial  insurance  of  its  own.  By  the  law  of  1907 
sickness  insurance  was  made  compulsory  for  all  employees 
in  manufactures,  whose  earnings  do  not  exceed  2,000  marks 
($480)  annually;  and  was  left  optional  with  employees  in 
agriculture,  household  industry  and  others  not  included  in 
the  compulsory  clauses.  The  organization  is  by  local  sick 
clubs,  as  in  Germany  and  Austria,  and  the  premiums,  based 
on  rate  of  wages  are  paid  one-half  by  employees  and  one- 


LAWS  ON  INDUSTRIAL  INSURANCE  15 

half  by  employers.  The  benefits  are  free  treatment  and 
sick  benefits  (50  per  cent,  of  wages  and  not  over  60  per 
cent,  of  daily  wages)  during  twenty  weeks.  Disputes  over 
claims  are  determined  by  arbitration  courts  and  by  the  insur- 
ance bureau.  According  to  the  statistics  of  1906,  Hungary 
had  twenty  and  five-tenths  million  inhabitants,  of  whom 
three  and  two-tenths  million  were  wage  earners.  There 
were  440  funds,  with  800,000  members.  The  premiums 
paid  amounted  to  eleven  million  marks  ($2,640,000),  (12.8 
marks,  $3.07  per  insured),  and  the  expenditures  nine  and 
one-half  million  marks  ($2,280,000),  (37  marks,  $8.88,  per 
sick  person  and  2.20  marks,  $.53  per  day  of  illness).  In  1907 
a  compulsory  accident  insurance  law  was  passed  similar  to 
the  German  law;  but  giving  only  60  per  cent,  of  wages, 
after  1 1  weeks  of  disability,  and  no  indemnity  for  less  than 
10  per  cent,  loss  of  wages.  The  Hungarian  miners  enjoy  a 
compulsory  invalid  and  old-age  pension  law  (since  1854), 
with  about  ninety-five  thousand  members.  In  1902  the  in- 
valid pension  was  250  marks  ($60),  the  widow's  pension 
105  marks  ($25.20),  and  the  orphan  pension  29  marks 
($6.96),  per  year.  Agricultural  employees  have  a  voluntary 
pension  system. 

ITALY 

Sickness  insurance  was  brought  under  the  law  of  1886, 
and  is  a  voluntary  system  for  wage  earners  in  all  occupa- 
tions. The  insurance  associations  are  registered  and  free, 
mutual  aid  societies  with  and  without  legal  privileges.  The 
state  contributes  subsidies  under  certain  conditions,  usually 
sickness  and  death  benefits,  and  not  medical  or  hospital 
treatment.  Out  of  thirty-three  million  inhabitants  (1905), 
ten  million  were  wage  earners;  and  of  these  one  million 
members  were  organized  in  6,535  societies;  seven  and  one- 
half  million  marks  ($1,800,000)  were  paid  in  premiums 
(7.5  marks,  $1.80  per  member),  and  four  million  marks 


16  INDUSTRIAL  INSURANCE 

($960,000),  (4  marks,  $.96  per  member),  were  paid  out 
in  benefits. 

The  law  of  1898  and  1904  makes  accident  insurance 
compulsory  for  workmen  and  foremen  with  annual  earn- 
ings up  to  1,700  marks  ($408)  ;  employees  in  manufactures 
and  in  agriculture,  where  motor  power  is  used,  are  included. 
The  employers  are  permitted  to  guarantee  the  insurance  of 
their  workmen  in  either  of  three  ways — in  a  state  fund,  in 
a  mutual  insurance  association  of  employers,  or  in  commer- 
cial insurance  companies.  The  employers  pay  all  premiums. 
Benefits  paid  are :  (a)  To  employees  incapacitated  for  labor 
by  injuries,  indemnities  up  to  50  per  cent,  of  the  wage  rates; 
(&)  for  invalided  employees,  a  lump  payment  up  to  six 
times  the  wages  of  a  year,  or  a  pension;  (c)  for  dependent 
relatives,  five  times  a  year's  wages  in  a  lump  payment; 
(d)  aid  in  emergency.  All  accidents  require  indemnity,  no 
matter  what  the  cause,  as  in  Germany.  Industrial  courts 
decide  most  cases  (under  160  marks,  $38.40) ,  and  ordinary 
courts,  at  reduced  fees,  determine  the  cases  involving  larger 
sums. 

Voluntary  invalid  and  old-age  pensions  are  regulated  by 
laws  (of  1898,  1901,  1907),  in  a  system  open  to  all  wage 
earners  and  governed  by  the  state.  Premiums  of  5  ($1.20) 
to  80  marks  ($19.20)  annually  are  paid  by  the  insured  and 
the  state  adds  by  way  of  subsidy  10  marks  ($2.40)  or  more 
per  head  to  the  pension.  The  benefits  paid  are :  For  persons 
incapacitated  for  labor,  after  contributing  five  years;  old- 
age  pensions  to  all  over  sixty  years  who  have  paid  premiums 
twenty-five  years  at  rate  of  $24  per  year  at  least ;  and  in  case 
of  death  before  pension  begins  all  premiums  are  to  be  repaid. 

FRANCE 

Sickness  insurance  (laws  of  1850,  1898)  includes  work- 
men of  all  occupations.  There  are,  as  in  Italy,  two  forms 


LAWS  ON  INDUSTRIAL  INSURANCE  17 

of  benefit  associations,  free  and  registered,  the  former  not 
enjoying  certain  legal  advantages  granted  the  latter.  The 
state  aids  the  associations  by  adding  subsidies  to  their  sick 
and  death  benefits.  The  sickness  insurance  of  miners  with 
less  than  $480  annual  earnings  was  made  compulsory  by 
law  in  1894;  and  these  have  199  funds  and  two  hundred 
and  five  thousand  members,  the  state  granting  subsidies. 
According  to  statistics  of  1904  France  had  thirty-nine 
million  inhabitants,  of  whom  nine  and  five-tenths  million 
were  wage  earners,  among  whom  there  were  17,182  benefit 
associations  with  a  membership  of  three  million,  five  hun- 
dred thousand.  The  premiums  paid  were  $6,480,000  ($1.76 
per  insured) ;  and  $4,480,000  were  paid  out,  $9.60  per 
person  incapacitated  from  sickness,  and  $.48  per  day  lost. 

Willoughby,  in  Workingmeris  Insurance,  gives  the  his- 
tory of  French  industrial  insurance  up  to  1898,  but  very 
important  progress  has  been  made  since  that  time. 

Up  to  the  time  of  the  international  workingmen's  insur- 
ance congress  at  Vienna  in  1905,  the  most  important  law 
was  that  of  April  9,  1898,  as  modified  by  the  laws  of  July 
30,  1899,  March  22,  1902,  March  31,  1905.  It  has  since 
been  further  amended  by  the  acts  of  July  12,  1906,  and 
July,  1907.  These  laws  are  interpreted  by  various  adminis- 
trative decrees  and  court  decisions. 

The  law  includes  in  its  scope  and  protection  workmen 
engaged  in  building,  factories,  workyards,  transportation, 
loading  and  unloading  goods,  warehouses,  mines,  quarries, 
manufactures  of  explosives,  and  agricultural  industries 
where  steam,  wind,  or  electric  power  is  used.  By  the  law  of 
1906  employees  in  commercial  establishments  were  added. 
The  employer  pays  the  indemnity,  if  the  disability  lasts  four 
days  or  more.  The  older  liability  law  is  abrogated,  for  the 
workman  has  no  other  legal  protection  aside  from  this  law. 


l8  INDUSTRIAL  INSURANCE 

Wages  above  $480  a  year  are  rated  at  only  one-quarter  of 
the  rates  named  below. 

The  rates  of  indemnity  in  case  of  absolute  and  permanent 
disablement  is  two-thirds  of  the  wage  rate;  for  partial  and 
permanent  disablement,  one-half  the  amount  of  reduction 
of  wages  due  to  the  accident  as  cause ;  for  temporary  disable- 
ment, a  daily  payment  of  one-half  the  wages.  In  case  of 
death  the  widow  receives  20  per  cent,  of  wage  rate  until  she 
marries  again,  when  she  receives  a  lump  sum  equal  to  the 
wages  of  three  years  and  then  she  loses  further  claim. 
The  fatherless  children  receive  pensions,  not  to  exceed  60 
per  cent,  of  wages,  until  they  are  grown.  The  indemnities 
are  payable  quarterly  and  cannot  be  seized  for  debt.  The 
employer  pays  for  medical  care  and  $20  toward  funeral 
expenses. 

Thus  far  the  law  merely  limits  and  defines  the  liability 
of  the  individual  employer,  as  in  the  English  compensation 
act.  Insurance  is  not  directly  compulsory,  as  in  Germany, 
but  it  is  encouraged  and  practically  made  universal,  by  the 
following  provisions:  Employers  are  released  from  other 
liabilities  on  condition  that  they  pay  at  least  one-third  the 
insurance  premiums  in  an  insurance  organization  which  is 
approved  by  the  government  and  which  guarantees  injured 
members  medical  relief  and  an  indemnity  of  at  least  half 
wages. 

To  guarantee  the  payment,  punctual  and  certain,  of  in- 
demnities the  law  regulates  insurance  by  collective  policies 
in  casualty  companies  or  by  associations  of  employers.  If 
the  employer  refuses  to  insure  he  must  contribute  to  a  state 
fund,  so  that  in  case  of  his  insolvency  the  workman  will  be 
paid  what  he  has  a  legal  right  to  expect. 

This  law  is  instructive  for  us  because  France  is  a  repub- 
lic, "a  free  country,"  where  state  compulsion  is  disliked  by 
many  people,  as  in  the  United  States. 


LAWS  ON  INDUSTRIAL  INSURANCE  19 

This  law  secures  protection  to  workmen  but  leaves  em- 
ployers free  to  choose  their  own  way  of  meeting  their  obli- 
gations. It  does  not  give  the  casualty  company  the  power  to 
charge  monopoly  prices.  It  prevents  employers  from  being 
ruined  by  obligation  to  pay  large  indemnities  which  are  too 
heavy  for  their  means. 

The  employers'  associations  have  been  able  to  keep  the 
costs  of  administration  at  about  5  per  cent,  of  the  total  ex- 
penditures ;  a  remarkably  low  rate  when  we  consider  that  the 
expenses  in  some  companies  under  our  American  laws 
reach  60  per  cent.,  leaving  only  40  per  cent,  available  for 
actual  insurance  of  workmen.  The  state  fund  is  little  used, 
while  the  employers'  mutual  associations  and  the  casualty 
companies  have  rapidly  increased  their  business.  Competi- 
tion between  these  agencies  secures  approximately  just 
rates.  The  casualty  companies  seem  to  be  the  most  ener- 
getic, enterprising,  and  inventive  in  the  development  of  the 
system  and  the  extension  of  its  benefits. 

When  the  accident  results  from  the  wilful  act  of  em- 
ployee no  benefit  is  paid  and  in  case  of  gross  fault  a  limited 
indemnity.  Where  disputes  occur  over  minor  cases,  a  justice 
of  the  peace  settles  the  affair,  in  other  matters  the  ordinary 
courts  are  involved,  but  with  simple  and  inexpensive  pro- 
cedure. By  laws  of  1898,  1905  seamen  are  under  a  compul- 
sory insurance  system  administered  by  the  state.  Both 
employers  and  employees  contribute  to  the  premiums.  Acci- 
dent pensions  are  paid  to  the  disabled  and  to  the  dependent 
of  deceased  relatives;  with  a  daily  benefit  for  the  disabled. 
A  commission  decides  all  disputes. 

The  invalid  and  old-age  pension  system  is  being  im- 
proved, and  an  important  measure  awaits  financial  adjust- 
ment. A  voluntary  plan,  open  to  all  citizens  (laws  of  1850, 
1886),  is  administered  by  the  state.  In  1904,  278,000  per- 
sons were  paid  old-age  pensions  (average  of  $25.68  each). 


20  INDUSTRIAL  INSURANCE 

Premiums  are  paid  by  the  insured  (from  $19.20  to  $96 
annually).  The  state  pays  a  subsidy  up  to  one-third  the 
pension.  The  pensions  are:  (a)  old-age  pension  after  the 
fiftieth  year  of  age;  (b)  invalid  pension  for  those  who  are 
disabled  before  that,  up  to  $240  per  year;  (c)  repayment  of 
premiums  at  death  before  pension  begins.  Seamen  (law 
of  1881)  are  included  in  a  compulsory  system,  administered 
by  the  state.  The  insured  pay  premiums  and  the  state  adds 
a  subsidy;  a  pension  is  paid  after  the  fiftieth  year;  widows 
and  orphans  receive  one-half  pension. 

Miners  (law  of  1894)  with  less  than  $480  annual  in- 
come have  a  pension  fund  to  which  workmen  and  employers 
pay  one-half  each.  Pension  begins  at  fifty-fifth  year.  A 
commission  decides  controverted  cases. 

BELGIUM 

Belgium  has  7,300,000  inhabitants  of  whom  2,100,000 
are  counted  wage  earners.  Sickness  insurance6  is  organ- 
ized in  mutual  benefit  associations  of  two  kinds,  as  in 
Italy  and  France,  free  and  registered,  the  latter  having 
legal  privileges  corresponding  to  specified  obligations  and 
restrictions.  The  state  grants  subsidies.  Sickness  and  death 
benefits  are  paid  but  not  ordinarily  medical  and  hospital 
care.  There  are  (in  1907)  3,330  associations  with  a  mem- 
bership of  400,000.  $864,000  were  paid  in,  or  $2.16  per 
member  on  the  average;  and,  $816,000  expended,  $8.04  per 
sick  person,  or  an  average  of  $.38  per  day  of  incapacity. 

Belgium  has  both  voluntary  and  compulsory  accident 
insurance,  with  a  tendency  to  make  all  compulsory,  as  it  is 
already  for  miners.  According  to  the  laws  of  1903,  work- 
men and  foremen  with  income  of  less  than  $480,  in  manu- 
factures, trade  and  agriculture  are  insured,  as  in  Italy,  ac- 
cording to  the  choice  of  the  employer,  either  in  a  state  fund, 

^Sickness  Insurance  Laws  of  1851,  1894 ;  Statistics  of  1904. 


LAWS  ON  INDUSTRIAL  INSURANCE  21 

mutual  companies  or  in  casualty  companies.  The  premiums 
are  paid  by  the  employer.  The  benefits  are:  (a)  In  case  of 
incapacity  from  accident,  daily  payment  up  to  50  per  cent,  of 
wages;  (b)  for  permanent  disability,  pension  up  to  50  per 
cent,  of  annual  wages;  (c)  dependent  relatives  up  to  30  per 
cent  of  wages;  (d)  fee  of  physician  and  expenses  of  burial. 
All  accidents  from  whatever  cause  bring  indemnity.  Dis- 
putes are  settled  by  justices  of  the  peace  or  by  a  commission 
having  summary  judicial  powers. 

There  are  about  137,000  miners  under  a  compulsory 
insurance  law  (of  1868).  The  insurance  is  effected  through 
benefit  associations  to  which  the  employers  and  workmen 
contribute  and  to  which  the  state  and  the  province  give  sub- 
sidies. The  benefits  vary  according  to  the  by-laws.  Dis- 
putes are  settled  by  a  commission. 

The  voluntary  pension  system  is  available  for  all  citizens. 
The  system  is  based  on  laws  of  1850,  1865,  1900  and  1903. 
The  fund  is  a  state  fund  which  in  1906  paid  8,277  pensions, 
on  an  average  of  $39.60  each.  Premiums  paid  by  the  insured 
are  from  $19.20  to  $96  annually,  and  a  state  subsidy  of  one- 
third  the  pension  is  added. 

The  pensions  begin  at  the  fifty-fifth  to  the  sixty-fifth 
year,  the  amount  varying  with  the  age  of  first  payment, — up 
to  $240  yearly.  An  invalid  pension  is  paid  for  those  who 
become  incapacitated  before  the  pension  year  arrives;  and 
premiums  paid  at  death  before  the  pension  begins  are  repaid 
to  the  family. 

A  compulsory  pension  system  is  organized  for  miners 
(law  of  1868),  under  the  form  of  benefit  associations  to 
which  employers,  workmen,  state  and  province  contribute. 
Pensions  are  paid  to  the  disabled  after  a  service  of  thirty  to 
thirty-five  years ;  and  widows  and  orphans  of  members  are 
granted  pensions.  A  commission  decides  disputes  at  mini- 
mum expense. 


22  INDUSTRIAL  INSURANCE 

NORWAY 

The  system  of  sickness  insurance  is  voluntary,  workmen 
of  various  occupations  having  free  or  registered  mutual 
benefit  associations.  Of  2,300,000  inhabitants,  400,000  are 
wage  earners.  In  1885  there  were  230  funds  with  45,000 
members  in  1907,  400  funds  with  60,000  members.  The 
premiums  and  benefits  are  regulated  by  by-laws ;  premiums 
are  paid  by  members.  The  average  premiums  were  $1.86 
and  the  benefits  $1.80  per  member  and  $.30  per  sick  day. 

Accident  insurance  was  made  compulsory  by  law  (1894, 
1906)  for  workmen  and  foremen  in  industries,  with  annual 
earnings  up  to  $324.  The  insurance  is  regulated  by  a  state 
department.  Premiums  are  paid  by  employers  according 
to  rates  of  wages  and  degree  of  hazard.  The  benefits  are : 
(a)  Free  medical  treatment  and  disability  payments  up  to 
60  per  cent,  of  the  wages,  or  free  hospital  care  together  with 
payments  to  dependents  up  to  50  per  cent,  of  wages  from 
the  fifth  week  of  disability;  (&)  death  benefit  of  $7.20 
and  payments  up  to  50  per  cent,  of  wages  to  dependents  of 
deceased.  There  is  no  indemnity  when  the  accident  results 
from  wilful  act  of  workmen  or  when  loss  is  under  5  per 
cent,  of  wages.  Dispute  claims  are  settled  by  a  commission 
called  for  the  purpose  and  without  costs. 

Norway  has  no  old-age  pension  system;  but  there  have 
been  efforts  in  this  direction  since  1890. 

SWEDEN 

Sickness  insurance  is  effected  by  means  of  free  or  regis- 
tered mutual  benefit  associations,  regulated  by  a  law  of  1891. 
Of  5,400,000  inhabitants,  1,000,000  are  wage  earners.  In 
1903  there  were  1,887  registered  associations  with  360,173 
members.  The  premium  (paid  by  members)  was  $1.62  to 
$2.31,  and  the  benefits  $1.86  or  $.32  per  day  of  sickness. 
The  state  subsidizes  the  associations. 


LAWS  ON  INDUSTRIAL  INSURANCE  23 

Accident  insurance  is  not  compulsory,  but  is  regulated  by 
a  law  of  1901,  and  is  extended  to  workmen  and  foremen  in 
manufactures.  The  employer  has  the  right  to  insure  either 
in  a  state  fund,  or  in  an  employer's  association,  or  in  a 
casualty  company;  and  the  employer  pays  the  premiums. 
The  benefits  are  (a)  Disability  payments  of  $.26  per  day 
from  the  sixty-first  day;  (b)  permanent  disability,  a  pen- 
sion of  $80  annually;  (c)  death  benefits  of  $16  and  pay- 
ments to  dependents  of  deceased  up  to  $80.  If  the  accident 
is  a  result  of  wilfulness  or  gross  fault,  or  loss  of  wages  is 
less  than  10  per  cent.,  there  is  no  indemnity.  Disputes  are 
settled  before  an  ordinary  court. 

There  is  no  old-age  pension  system,  but  efforts  have  been 
put  forth  since  1891  to  organize  such  a  system. 

DENMARK 

Sickness  insurance  is  voluntary  and  regulated  by  a  law 
of  1892.  Persons  of  small  means  in  all  callings  are  insured 
in  free  or  registered  associations.  Of  2,600,000  inhabitants, 
400,000  were  wage  earners.  In  1907  there  were  1,452  regis- 
tered associations  with  553,000  members.  The  average 
premiums  (paid  by  members)  were  $1.92,  and  the  benefits 
$2.54  per  member  and  $.55  per  day  of  sickness.  The  state 
pays  a  subsidy.  Disputes  are  settled  without  cost  by  an  in- 
spector of  sickness  insurance  associations. 

Accident  insurance  is  voluntary  for  workmen  and  fore- 
men in  manufactures  and  agriculture  (where  motors  are 
used),  where  the  annual  earnings  are  under  $648  (law  of 
1898,  1 903);  and  compulsory  for  seamen  and  officers  of 
ships  (law  of  1905).  The  employers  in  industries  and  agri- 
culture may  insure  in  associations  of  their  own  organization 
or  in  casualty  companies;  there  is  no  state  fund  for  these. 
For  the  fisher  folk  a  state  fund  is  established. 

Premiums  are  paid  by  the  employers.     In  case  of  the 


24  INDUSTRIAL  INSURANCE 

fishermen  the  premium  is  $1.34  per  insured  person,  and  the 
state  pays  a  subsidy.  The  benefits  in  voluntary  insurance 
are:  (a)  Disability,  daily  payment  up  to  60  per  cent,  of 
wages  from  the  fourteenth  week;  (£)  permanent  disability, 
a  lump  sum  up  to  six  times  the  annual  wage ;  to  the  depend- 
ents of  a  deceased  workman,  a  lump  sum  of  four  times  a 
year's  wages  and  $12  death  benefit.  Seamen  and  officers  of 
ships  are  under  the  compulsory  law  of  1905,  employers 
pay  premiums  and  have  choice  between  their  own  associa- 
tions, a  state  fund,  and  the  casualty  companies.  No  in- 
demnity is  paid  in  case  of  gross  fault  of  the  injured  man. 
A  workmen's  insurance  council  determines  controverted 
questions. 

There  is  no  invalid  and  old-age  pension,  but  the  poor 
law  (1891,  1902)  is  extended  so  as  to  secure  a  pension  for 
all  indigent  persons  over  sixty  years  of  age.  The  expense 
is  divided  equally  between  state  and  commune.  The  pension 
varies  with  need,  averaging  $28.  The  last  annual  payment 
(1905)  was  $2,040,000,  $30.56  per  head. 

FINLAND 

Sickness  insurance  is  regulated  by  orders  of  council  of 
1897,  but  is  voluntary;  premiums  and  benefits  being  fixed 
by  by-laws.  Of  3,000,000  inhabitants,  500,000  were  work- 
men. In  1905  there  were  177  associations  with  40,637 
members;  the  average  premium  (paid  by  members)  being 
$2;  the  benefits  $1.68  per  member,  or  $.36  per  day  of 
sickness.  The  state  adds  a  subsidy. 

Finland  has  a  compulsory  accident  insurance  law  for 
workmen  in  manufactures  (with  less  than  600  marks=c. 
$150  annual  wages,  law  of  1895),  and  for  seamen  since 
1903.  In  1906  there  were  80,900  insured  workmen  and 
3,100  insured  seamen.  The  premiums  are  paid  by  employ- 
ers either  into  a  state  fund,  a  mutual  association  or  a  casualty 


LAWS  ON  INDUSTRIAL  INSURANCE  25 

company.  The  benefits  paid  are:  (a)  disability,  daily  pay- 
ment up  to  60  per  cent,  of  wages,  or  free  hospital  care, 
together  with  payments  to  dependents  up  to  40  per  cent,  of 
wages,  from  the  seventh  day  of  disability;  (6)  permanently 
disabled,  pension  up  to  60  per  cent,  of  annual  wages;  (c) 
dependents  of  deceased,  pension  up  to  40  per  cent,  of  earn- 
ings. In  case  of  wil fulness  or  gross  fault  of  the  injured 
workman  there  is  no  indemnity.  Controversies  are  decided 
by  an  ordinary  court. 

Old-age  and  invalid  pensions  are  provided  only  by  vol- 
untary organizations  regulated  by  orders  in  council  of  1897. 
There  were,  in  1905,  43  funds,  with  12,126  members.  The 
ordinary  courts  are  used  in  cases  of  doubt. 

SPAIN 

Sickness  insurance.  A  law  of  1887  regulates  and  en- 
courages voluntary  insurance  societies.  Of  twenty  million 
inhabitants,  seven  million  were  wage  earners  (in  1905).  In 
1907,  there  were  150,000  members  of  800  societies. 

Accident  insurance  is  not  yet  compulsory,  but  a  law  of 
1900  fosters  voluntary  schemes  of  employers  in  industries 
and  agriculture  (where  there  is  motor  power).  The  em- 
ployers pay  all  the  premiums  in  associations  of  their  own 
or  in  casualty  companies.  The  benefits  are:  (a)  disability, 
50  per  cent,  of  wages;  (6)  invalids,  lump  payment  up  to 
twice  annual  wages;  (c)  lump  payment  of  twice  a  year's 
wages  to  dependents  of  deceased;  (d)  physician's  fees  and 
funeral  expenses.  The  procedure  before  the  ordinary 
courts  is  simplified.  There  is  no  indemnity  in  case  of  wilful- 
ness  or  catastrophe.  In  1906  there  were  seven  mutual  and 
ten  stock  companies  which  paid  out  $288,000  for  32,188 
accidents. 

Old-age  and  invalid  pensions  are  on  a  voluntary  basis 
for  workmen,  employees  and  petty  employers  (up  to  $576 


26  INDUSTRIAL  INSURANCE 

income)  in  all  occupations.  Insurance  is  effected  in  a  state 
fund  supplied  by  premiums  of  the  insured,  with  subsidies  of 
state,  province,  commune,  savings  banks,  etc.  The  highest 
pensions  paid  are  $288  yearly,  with  repayment  of  premiums 
if  death  occurs  before  pension  begins.  Settlement  in 
ordinary  courts,  for  workmen  free  of  costs. 

HOLLAND 

With  5,700,000  inhabitants  Holland  has  1,000,000  wage 
earners.  Sickness  insurance  is  voluntary  and  organized  in 
free  associations.  In  1890  there  were  650  associations 
with  600,000  members.  Premiums  are  on  the  average 
$1.44  per  member;  benefits  are:  medical  attendance,  medi- 
cine and  sickness  payments. 

Accident  insurance  is  compulsory  (law  of  1901). 
Workmen  and  foremen  in  manufactures  (up  to  $1.68  daily 
wages)  are  insured  in  a  state  fund,  mutual  associations  or 
casualty  companies.  In  1906  there  were  82,129  insured 
establishments.  Premiums  are  paid  by  employers  according 
to  wages  and  risk.  The  receipts  of  1906  were  $1,176,000. 
The  benefits  are  (a)  Disability,  free  treatment,  and  daily 
payments  up  to  70  per  cent,  of  wages;  (&)  permanent  dis- 
ability, pensions  up  to  70  per  cent,  of  wages  from  seventh 
week;  (c)  to  dependents  of  deceased,  pensions  up  to  60 
per  cent,  of  wages  and  a  death  benefit  of  thirty  times  the 
daily  wage.  In  case  of  wil fulness  no  indemnity  is  paid  and 
in  case  of  drunkenness  only  half.  In  1906  $1,032,000  were 
paid  to  60,022  injured  and  268  killed.  Settlements  are  made 
in  case  of  doubt  by  councils. 

Of  old-age  pensions,  no  general  system  exists. 

LUXEMBURG 

Sickness  insurance  is  compulsory  (law  of  1901,  1908) 
for  workmen  and  employees  with  earnings  up  to  $576,  in  in- 
dustries and  trade.  Insurance  is  effected  through  local 


LAWS  ON  INDUSTRIAL  INSURANCE  27 

associations  and  funds.  In  1906  of  250,000  inhabitants 
55,000  were  wage  earners.  There  were  sixty-six  funds 
with  36,915  members.  The  premiums  are  paid  two-thirds 
by  employees  and  one-third  by  employers,  as  in  Germany; 
the  average  of  $7.68  per  person — $288,000  in  all.  Benefits 
paid  (as  in  Germany)  :  (a)  Free  medical  attendance  and 
sickness  payments  (50  per  cent  of  average  wages),  or  free 
hospital  care  and  half -sickness  payments  to  dependents  for 
thirteen  weeks;  (b)  same  rates  for  lying-in  women  (six 
weeks)  ;  (c)  death  benefit  of  twenty  times  daily  wages. 
In  1906  $268,800  were  paid;  $8.64  per  sick  person,  or  $.73 
per  day  of  sickness.  Controversies  are  settled  by  supervis- 
ing board  without  costs. 

The  compulsory  accident  insurance  is  ordered  by  laws 
in  1902  and  1908.  Workmen  and  foremen  in  industry  (up 
to  $720  annual  income)  are  insured.  By  regulations,  fore- 
men with  $720  to  $864  are  brought  under  the  law.  Volun- 
tary insurance  is  organized  for  petty  employers  and  em- 
ployees not  included  in  the  law.  The  insurance  associations 
are  organized  by  territory.  Assessments  are  levied  on  em- 
ployers according  to  the  number  of  employees  and  the  risk  of 
the  trade  to  cover  the  annual  expenditures  and  the  pensions. 
Benefits  are:  (a)  Free  medical  treatment  and  payments  up 
to  66%  per  cent,  of  annual  wages — after  the  end  of  the 
sickness  insurance,  at  latest  after  the  fourteenth  week;  (&) 
death  benefit  (twenty  times  the  daily  wages)  and  payment 
up  to  60  per  cent,  of  wages.  All  accidents  are  indemnified 
(except  in  case  of  wilful  act  of  the  injured  person).  In 
1907,  36,634  were  insured  in  2,209  establishments.  In  one 
year  $235,200  were  paid  in  ($640  per  insured)  and  $42,357 
were  paid  out.  Settlements  are  made  without  cost  before 
committees  of  the  directors,  or  arbitration  courts,  or  (over 
$288)  before  the  superior  court. 

No  old-age  and  invalid-pension  system  exists. 


28  INDUSTRIAL  INSURANCE 

Domestic  servants  are  provided  with  care  in  sickness,  if 
this  is  in  the  contract;  otherwise  they  have  no  protection. 
Sailors  while  on  board  are  given  medical  relief  according  to 
a  law  of  1906. 

GREAT   BRITAIN 

England  has  long  resisted  the  continental  tendency  to 
make  insurance  compulsory,  and  it  can  hardly  be  counted 
among  the  nations  which  have  a  full  legal  insurance  system. 
Recent  legislation,  however,  indicates  that  Parliament  is 
learning  its  lesson. 

Sickness  insurance  (until  the  recent  amendment  to  the 
Compensation  Act,  1906-7)  has  been  almost  entirely  a 
private  matter.  The  laws  of  1875  and  1896  sought  to  give 
some  legal  recognition  and  control  to  the  voluntary  agencies. 
Workmen  of  all  occupations  are  permitted  to  organize  under 
these  laws,  in  free  and  registered  societies.  Premiums  and 
benefits  in  the  "friendly  societies"  are  regulated  by  by-laws.7 

According  to  statistics  of  1904,  there  were  in  Great 
Britain  forty-two  and  one-half  million  of  inhabitants,  of 
whom  thirteen  million  were  workingmen.  There  were  27,- 
615  mutual  benefit  societies,  with  a  membership  of  five  and 
nine-tenths  million,  about  half  of  them  being  wage  workers. 
Official  statistics  are  very  incomplete.  Partial  indemnity 
for  loss  by  occupational  diseases  is  provided  under  the  Com- 
pensation Law  next  to  be  mentioned. 

Up  to  1880  England  gave  legal  protection  to  its  injured 
workingmen  only  under  the  common  law  of  employers' 
liability  for  damages  in  cases  of  negligence,  as  is  still  the 
law  in  the  United  States.  In  that  year  a  much  more  string- 
ent law  was  enacted  under  which  the  employer  was  made 
liable  for  accidents  caused  by  defective  works,  plant,  or 
machinery,  or  by  the  negligence  of  persons  in  authority 
under  him.  Even  this  act  proved  to  be  unsatisfactory.  In 

7  See  Baernreither,  English  Associations  of  Workingmen. 


LAWS  ON  INDUSTRIAL  INSURANCE  29 

1897  Parliament  adopted  the  Compensation  Law  based  on 
the  entirely  new  principle  that  a  business  must  make  meas- 
ured compensation  to  workmen  injured  in  any  way  in  the 
ordinary  course  of  employment,  unless  there  is  gross  fault 
on  the  part  of  the  employee.  To  secure  indemnity  the 
workman  is  not  required  to  prove  negligence  in  the  em- 
ployer, but  only  the  fact  that  he  has  been  injured  in  the 
course  of  employment. 

"If  in  any  employment  personal  injury  by  accident  aris- 
ing out  of  and  in  the  course  of  the  employment  is  caused  to 
a  workman  his  employer  shall  be  liable  to  pay  compensa- 
tion." The  schedule  of  compensation  is:  in  the  event  of 
death,  three  years'  wages,  not  exceeding  £300  ($1,500),  but 
not  less  than  £150  ($750),  to  dependents,  or  a  proportionate 
sum  to  partial  dependents;  if  no  dependents,  medical  and 
funeral  expenses  not  exceeding  £10  ($50)  ;  during  disable- 
ment exceeding  one  week  half  the  average  weekly  wage, 
including  value  of  board  and  lodging,  not  exceeding  £i 
($5)  a  week  is  paid;  in  case  of  permanent  disable- 
ment compensation  is  payable  for  the  whole  of  the  after 
life  of  the  person  injured.  An  injured  workman  under 
twenty-one  years  of  age  earning  less  than  £i  ($5)  a  week, 
including  value  of  board  and  lodging,  is  entitled  to  com- 
pensation of  full  wages,  not  exceeding  10  s.  ($2.40). 

Serious  and  wilful  misconduct  or  negligence  on  the  part 
of  the  workman  deprives  him  (or  her)  of  compensation 
only  provided  the  accident  does  not  result  in  death  or  per- 
manent disablement.  On  the  other  hand,  such  misconduct 
or  negligence  on  the  part  of  the  employer  will  result  in  his 
prosecution  under  the  employers'  liability  act  of  1880  and 
the  common  law  and  the  Fatal  Accidents  Act  of  1846,  which 
open  the  way  to  much  heavier  damages  in  such  cases  than 
could  be  obtained  under  the  compensation  act.  Indeed,  these 
laws  are  always  at  the  disposal  of  any  injured  person  who 


30  INDUSTRIAL  INSURANCE 

elects  to  take  advantage  of  them,  although  one  cannot 
prosecute  both  under  these  and  under  the  compensation  act. 
To  try  under  the  former  does  not  debar  the  plaintiff,  if  he 
fails  from  trying  under  the  latter,  but  from  any  award 
made  to  him  will  be  deducted  the  costs  incurred  by  the  first 
action. 

In  1900  the  provisions  of  the  act  of  1897  were  extended 
by  amendment  to  agricultural  laborers;  and  in  1906  very 
important  additions  were  made,  so  that  now  several  diseases 
which  can  be  distinctly  traced  to  the  occupation  are  included. 
An  "injury"  may  be  due  either  to  "accident"  or  to  "disease 
of  occupation." 

Employers  usually  find  it  to  their  interest  to  cover  their 
risk  b$  paying  friendly  societies  or  casualty  companies  to 
carry  it  for  them  in  consideration  of  premiums  paid.  Under 
the  act  of  1897—1900  the  premiums  were  said  not  to  be  a 
very  heavy  burden  on  industry;  a  small  addition  to  the 
wages  fund  was  sufficient.  While  we  have  not  as  yet  suffi- 
cient evidence  for  a  conclusion,  the  time  being  brief  since  the 
new  act  went  into  operation  (July,  1907),  it  seems  probable 
that  the  rate  of  insurance  is  to  be  considerably  higher.  This 
is  not  so  much  due  to  the  additional  causes  of  injury  named 
in  the  act  as  to  the  uncertainties  of  litigation  caused  by  the 
interpretation  of  a  cumbrous  and  awkward  law,  or  rather 
of  three  laws,  each  based  on  a  different  principle — the 
ancient  common  law,  the  employers'  liability  statute  of 
1880,  and  the  recent  compensation  acts.  This  uncertainty 
breeds  litigation  and  must  raise  the  rates  of  premiums. 
Many  think  that  a  simple  and  directly  compulsory  insurance 
law  would  be  far  more  effective,  satisfactory,  and  inex- 
pensive. But  awkward  as  this  law  may  be,  the  nation  will 
not  retreat  from  it;  it  will  improve  it  by  degrees,  English 
fashion,  and  compel  it  to  work  at  last. 

Old-age  pensions. — Since  1885  the  statesmen  of  Great 


LAWS  ON  INDUSTRIAL  INSURANCE  31 

Britain  have  discussed  old-age  pensions,  have  collected  and 
published  statistics,  have  talked  over  schemes,  and  offered 
bills.  For  many  years  the  state  offered  annuities  to  those 
who  made  deposits  to  pay  for  them — up  to  $500.  Between 
1865-90  there  were  21,000  pensions,  on  an  average  of 
$87.50  each. 

The  Old- Age  Pensions  Bill,  after  many  years  of  debate 
and  the  delays  caused  by  the  ruinous  expenditures  of  the 
Boer  War,  passed  the  House  of  Commons  by  a  vote  of  417 
votes  for  it  and  only  29  in  opposition;  it  is  a  national  and 
not  a  partisan  act.  The  scheme  is  non-contributory. 

The  British  Old-Age  Pensions  Bill  (8,  Edw.  VII)  in- 
troduced into  the  House  of  Commons  in  July,  1908,  provides 
that  the  receipt  of  an  old-age  pension  is  conditioned  upon 
the  attainment  of  the  seventieth  year  of  age,  and  a  residence 
of  at  least  twenty  years  in  the  United  Kingdom,  and  the 
means  of  the  person  must  not  exceed  £31  10  ,y.  One  is  dis- 
qualified who  has  been  in  receipt  of  any  poor  relief,  except 
in  case  of  medical  assistance  or  relief  of  the  dependent  of 
the  person  in  a  lunatic  asylum,  infirmary,  or  hospital,  or 
payment  of  expenses  of  burial  of  the  dependent,  or  any 
relief  which  is  expressly  declared  by  law  not  to  be  a  dis- 
qualification for  registration  as  a  parliamentary  elector. 
One  is  also  disqualified  who  has  habitually  failed  to  work, 
according  to  his  ability,  opportunity,  and  need,  for  the  main- 
tenance and  benefit  of  himself  and  those  legally  dependent 
upon  him;  and  persons  who  have  been  condemned  to  be 
imprisoned,  without  the  option  of  a  fine,  or  to  suffer  any 
greater  punishment,  or  any  person  of  sixty  years  or  upward 
who  has  been  convicted  under  the  Inebriates  Act  of  1898. 
If  any  person  has  directly  or  indirectly  deprived  himself  of 
any  income  or  property,  in  order  to  qualify  himself  for  the 
receipt  of  an  old-age  pension,  or  for  a  pension  of  a  higher 
rate  than  he  would  otherwise  receive,  that  income  or  the 


'.'F    TH« 

iVERSITY 

OF 


ITYJ 


32  INDUSTRIAL  INSURANCE 

value  of  the  property  shall,  for  purposes  if  this  bill,  be  taken 
for  a  part  of  the  means  of  that  person.  Pensions  shall  be 
paid  weekly  in  advance.  A  pension  is  inalienable,  and  can- 
not be  assigned  by  any  agreement,  nor  taken  in  bankruptcy 
for  the  benefit  of  creditors.  ^Claims  are  settled  by  a  local 
pension  committee,  and  by  pension  officers,  with  the  right 
of  anyone  to  appeal  to  the  central  pension  authority.  A 
local  pension  committee  is  appointed  for  every  borough  and 
urban  district  by  the  council  of  the  borough,  district,  or 
county.  The  central  pension  authority  is  the  Local  Govern- 
ment Board,  and  pension  officers  are  appointed  by  the 
treasury.  Any  person  knowingly  making  a  false  statement, 
for  the  purpose  of  obtaining  a  pension,  is  liable,  on  sum- 
mary conviction,  to  imprisonment  for  a  term  not  exceeding 
six  months  at  hard  labor.  In  case  of  obtaining  a  pension  by 
improper  representation,  one  is  liable  to  have  to  repay  to  the 
treasury  the  sums  paid  him.  The  treasury,  in  conjunction 
with  the  local  government  board,  and  with  the  postmaster- 
general,  makes  regulations  for  carrying  the  act  into  effect. 
The  regulations  must  provide  a  way  for  the  claimants  to 
make  their  claims  and  to  obtain  information  through  the 
post-office.  The  pensions  are  paid  out  of  monies  provided 
by  Parliament,  and  no  contributions  on  the  part  of  the 
pensioner  are  required.  Where  the  yearly  means  of  the 
pensioner  do  not  exceed  £21,  the  rate  of  pension  will  be  5  s. 
per  week.  The  means  exceeding  £21  but  not  exceeding  £23, 
12  s.,  6  d.,  the  pension  is  4  s.  per  week.  The  means  being 
£23,  12  s.,  6  d.,  but  not  over  £26,  5  s.>  the  pension  is  3  ^  per 
week.  The  means  being  over  £26,  5  s.,  but  not  over  £28, 
17  s.t  6  d.,  the  pension  will  be  2  s.  per  week.  The  means 
being  over  £28,  17  s.,  6  d.,  but  not  over  £31,  10  s.,  the 
pension  is  i  s.  per  week.  Where  the  means  exceed  £31, 
10  s.,  there  is  no  pension. 

It  is  estimated  that  572,000  persons  will  be  in  receipt  of 


LAWS  ON  INDUSTRIAL  INSURANCE  33 

state  pensions  in  the  financial  year  1908-9.  The  estimated 
cost  will  be  for  the  first  year,  £7,500,000  sterling.  The 
objection  was  raised  that  the  ten-shilling  test  was  unfair  to 
men  who  had  paid  through  their  working  lives  into  trade 
unions  and  friendly  societies  and  were  in  receipt  of  small 
pensions  from  these  sources.  Therefore  the  bill  was  modi- 
fied by  introducing  a  sliding  scale. 

Mr.  Lloyd  George,  as  chancellor  of  the  exchequer,  in  a 
speech  on  the  second  reading  of  the  bill,  disclosed  the  new 
economic  and  political  doctrine  which  lies  at  the  basis  of  a 
national  social  policy : 

As  long  as  you  have  taxes  upon  commodities  which  are  con- 
sumed practically  by  every  family  in  the-  country,  there  is  no  such 
thing  as  a  non-contributory  scheme.  If  you  tax  tea  and  coffee  and 
partly  sugar,  beer,  and  tobacco,  you  hit  everybody  one  way  or  another. 
Indeed,  when  a  scheme  is  financed  from  public  funds  it  is  first  as 
much  a  contributory  scheme  as  one  financed  directly  by  means  of 
contributions  arranged  on  the  German  or  any  other  basis.  Again,  a 
workman  who  has  contributed  by  his  strength  and  his  skill  to  the 
increase  of  the  national  wealth  has  made  his  contribution  to  the  fund 
from  which  his  pension  is  to  come  when  he  is  no  longer  able  to  work.8 

While  the  English  scheme  is  not  yet  squarely  on  an  in- 
surance basis  it  has  several  remarkable  advantages.  Thus 
the  burden  of  cost  falls  upon  the  employer  wholly  from  near 
the  beginning  of  disability,  not  after  an  interval  of  partial 
contribution  through  a  sickness  insurance  fund,  as  in  Ger- 
many ;  and,  as  occupational  diseases  are  treated  as  responsi- 
ble for  disability,  they  are  brought  under  the  provisions  for 
compensation.  Sickness  due  to  other  than  occupational 
causes  must  be  insured  in  other  ways;  there  is  no  legal 
organization  yet  for  this  purpose. 

CANADA 

No  federal  or  provincial  provisions  are  made  for  sick- 
ness, accident,  or  old-age  insurance  of  workingmen.  There 

8  The  Outlook,  July  18,  1908,  pp.  591,  592. 


34  INDUSTRIAL  INSURANCE 

are  numerous  casualty  companies  which  sell  sickness  and 
accident  insurance  to  individual  workmen  or  by  collective 
policies.  The  Grand  Trunk  Railway  has  a  provident  asso- 
ciation and  gives  old-age  pensions ;  the  Intercolonial  Railway 
has  a  relief  and  insurance  organization.9  As  the  Dominion 
stands  in  close  relations  with  Great  Britain  and  has  an 
energetic  and  progressive  labor  department  some  legislation 
to  correct  the  evils  of  the  employers'  liability  law  may 
confidently  be  expected  in  a  few  years. 

The  Toronto  Globe,  in  an  editorial  of  July  26,  1904, 
said :  "There  are  two  kinds  of  provision  which  every  railway 
corporation  should  make  for  its  employees — insurance  for 
accidents  and  insurance  for  old  age."  The  editor  claims 
that  such  insurance  would  tend  to  secure  more  efficient  em- 
ployees and  diminish  the  public  losses  caused  by  railroad 
accidents. 

What  is  true  in  this  regard  of  a  private  railway  corporation  is  true 
a  fortiori  of  a  government  that  owns  and  operates  a  railway  system  of 
its  own.  So  long  as  society  cares  sympathetically  for  the  unfit,  and 
prides  itself  for  the  humanity  it  displays  in  doing  so,  there  will  be  a 
logical  demand  to  furnish  protection  for  the  infirmity  of  old  age.  In 
this  country  an  old-age  pension  appears  to  be  a  long  way  off,  but  it  is 
quite  legitimate  to  anticipate  it  by  making  some  provision  for  the 
support  and  comfort  of  government  railway  employees  who  have 
become,  through  age,  disease,  or  accident,  unable  to  endure  the  stress 
of  their  responsible  calling.  It  is  in  the  public  interest  that  men 
whose  eyesight  has  become  hopelessly  dim,  whose  hearing  has  become 
incurably  dull,  or  whose  nerves  have  completely  broken  down  under 
the  strain  of  incessant  watchfulness,  should  not  be  intrusted  with  cer- 
tain kinds  of  railway  duty,  and  it  is  much  easier  to  retire  them  at  the 
proper  time,  if  reasonable  provision  has  been  made  by  the  state  for 
their  future  living. 

Friendly  societies  in  Canada.^     There  are  three  types 

9  Riebenack,  Railway  Provident  Institutions,  pp.  82  ff. 

10  From    the    History    of    Canadian    Legislation    Affecting    Friendly 
Societies,  by  Ingram  E.  Bill,  in  an  unpublished  manuscript,  1908. 


LAWS  ON  INDUSTRIAL  INSURANCE  35 

of  friendly  societies  organized  by  Canadian  legislation. 
First,  the  fraternal  insurance  orders  with  their  logical  sys- 
tem, representative  government,  ritualistic  work,  and  frater- 
nal benefits;  second,  labor  unions  which  contract  insurance; 
third,  mutual  societies  for  sick,  funeral,  and  disability  bene- 
fits, such  as  industrial  societies,  civic  employees'  societies, 
and  other  associations  where  the  determining  relation  is 
occupation,  race  or  religion. 

If  we  take  nineteen  of  the  more  important  fraternal 
associations  which  are  doing  business  in  Canada,  we  may 
measure  their  importance  by  the  following  facts : 

These  associations  have  a  total  membership  of  1,190,- 
380,  with  a  total  insurance  in  force  of  $1,626,695,858.  The 
total  Canadian  membership  of  the  combined  societies  is 
345,557,  with  insurance  in  force  to  the  amount  of  $405,826,- 
308.  The  total  assets  of  these  societies  amount  to  $30,874,- 
223.  Friendly  societies  in  Canada  have  more  than  doubled 
during  the  past  ten  years  and  have  been  an  exceedingly 
important  factor  in  preventing  the  necessity  of  appeal  to 
charity.  The  Canadian  Fraternal  Association  is  a  society 
composed  of  the  representatives  of  seventeen  of  the  promi- 
nent friendly  societies  of  Canada.  It  was  organized  in  1891 
and  has  for  its  object  to  unite  all  fraternal  benefit  societies 
for  the  purpose  of  mutual  information,  benefit,  and  protec- 
tion. In  Canada,  as  in  the  United  States,  the  struggle  is 
going  on  between  the  unbusiness-like  and  sentimental  theory 
of  the  earlier  organizations  and  the  modern  actuarial  views. 
The  scientific  basis  is  demanded  by  the  leaders  of  political 
thought  in  the  Dominion  and  in  the  provinces,  and  progress 
is  noted  on  every  hand,  but  it  is  progress  which  is  impeded 
by  thoroughly  unsound  views  as  to  what  can  be  done.  Prob- 
ably, however,  the  Dominion  is  nearer  to  a  thoroughly 
business-like  control  than  we  are  in  the  United  States.  The 
policy  of  the  government  is,  as  soon  as  possible,  to  bring 


36  INDUSTRIAL  INSURANCE 

the  insurance  associations  under  government  license  and 
control,  but  the  more  radical  legislation  proposed  by  the 
government  has  thus  far  been  postponed,  and  it  cannot  be 
said  that  the  fraternal  societies  at  this  time  are  supporting 
their  agreements  by  requiring  adequate  premiums  and 
reserves. 

AUSTRALIA    AND    NEW    ZEALAND11 

The  states  of  Australasia  have  made  some  of  the  most 
interesting  experiments  in  the  field  of  industrial  insurance. 
The  population  of  the  Australasian  states  of  New  Zealand 
at  the  end  of  1906  was  estimated  as  follows:  Victoria, 
1,237,998;  New  South  Wales,  1,526,699;  Queensland,  535,- 
no;  South  Australia,  383,831;  West  Australia,  261,746; 
Tasmania,  180,163;  New  Zealand,  908,726:  Total,  5,034,- 

273- 

The  wages  and  cost  of  living  are  relatively  high.     The 

workingmen's  insurance  in  the  states  of  the  Commonwealth 
of  Australia  and  of  New  Zealand  exhibits  common  traits 
in  respect  to  sickness  and  accident  insurance.  According  to 
the  English  example,  the  system  is  entirely  voluntary,  and 
the  friendly  societies  are  the  most  important  organs,  the 
trades-unions  having  a  subordinate  place.  The  compensa- 
tion laws  follow  the  example  of  the  mother  country,  and 
know  nothing  of  compulsory  insurance,  but  in  the  case  of 
old-age  insurance  the  matter  stands  in  a  different  light. 
New  Zealand  was  the  first  state  which  secured  for  its  citi- 
zens old-age  pensions,  and  New  South  Wales  and  Victoria 
have  followed  in  the  same  path.  For  persons  in  the  better 
economic  positions,  industrial  insurance  in  private  societies 
is  quite  extensive. 

Old-age  pensions. — The  old-age  pensions  in  New  Zea- 
land differ  from  the  German  system  in  a  very  important 

"Alfred  Manes,  in  Zacher's  Arbeit erversicherung  im  Auslande, 
Heft  1 8. 


LAWS  ON  INDUSTRIAL  INSURANCE  37 

particular;  they  do  not  require  premiums  to  be  paid  by  em- 
ployers or  workmen,  as  such,  but  the  pensions  are  paid  out 
of  the  state  funds.  The  law  of  New  Zealand  justifies  the 
granting  of  old-age  pensions  by  the  argument  that  it  is  only 
fair  that  upright  persons,  who  during  their  productive  years 
have  contributed  to  the  funds  of  the  colony,  by  the  payment 
of  taxes,  and  to  the  wealth  of  the  land,  by  their  labor,  should 
be  cared  for  in  their  old  age  by  the  country.  The  argument 
for  old-age  pension  in  New  South  Wales  is  about  the  same 
in  language,  while  the  legislature  in  Victoria  simply  says 
that  it  is  the  duty  of  the  state  to  care  for  its  aged  and  help- 
less poor.  The  highest  rate  of  pension,  according  to  the 
legislation  in  the  beginning  of  1908,  is  now  £26  annually,  or 
10  s.  weekly.  The  law  of  New  South  Wales  has  a  provision 
for  married  persons,  which  is  not  contained  in  the  laws  of 
the  other  states.  When  a  husband  or  wife  is  authorized  to 
receive  a  pension  the  amount  which  can  be  paid  to  each  of 
them  is  at  most  £19,  10  s.,  annually.  These  highest  rates 
may  be  reduced  for  various  reasons.  Conditions  for  receiv- 
ing pensions  are,  first  of  all,  the  attainment  of  a  certain  age. 
In  New  Zealand,  New  South  Wales,  and  Victoria,  a  person 
must  be  sixty-five  years  old.  In  New  South  Wales,  persons 
under  sixty-five  years  may  receive  pensions,  after  they  have 
completed  the  sixtieth  year,  in  case  their  bodily  condition  is 
such  that  they  are  unable  to  maintain  themselves.  New  Zea- 
land and  New  South  Wales  require  an  unbroken  residence  of 
twenty-five  years.  The  New  Zealander  who  claims  a  pen- 
sion, must  show  that  he  has  lived  a  moral  and  sober  life, 
especially  during  the  last  five  years  before  the  claim  is  made. 
During  the  last  twelve  years  he  must  not  have  had  a  prison 
record  of  over  four  months,  and  he  must  be  free  from  any 
prison  record  which  involves  an  incarceration  of  over 
twelve  months,  and  if  he  is  married  he  must  not  have 
deserted  his  wife.  Victoria  also  requires  that  one  who. 


38  INDUSTRIAL  INSURANCE 

receives  a  pension  must  not  have  been  convicted  of  drunk- 
enness during  the  last  two  years,  three  times  or  oftener.  In 
New  Zealand  a  pension  is  not  granted  to  one  except  when 
his  income  is  not  more  than  £60  per  year,  or  when  his  entire 
property  is  not  worth  more  than  £260.  In  New  South 
Wales  the  income  must  not  exceed  £25,  nor  the  property 
more  than  £390.  In  Victoria  it  is  estimated  that  the  average 
weekly  income,  during  the  last  six  months,  should  not 
exceed  10  s.,  and  the  property  of  the  applicant  must  be  under 
£160.  The  law  of  Victoria  prescribes  that  the  nearest 
relatives  of  the  applicant  must  be  incapable  of  caring  for 
the  applicant.  He  himself  must  have  sought  labor  to  sup- 
port himself  and  his  family.  These  requirements  are  not 
found  in  the  laws  of  New  Zealand  and  New  South  Wales. 
Since  the  organization  of  the  Australasian  Federation,  the 
parliament  of  1905  appointed  a  commission  to  study  the 
problem,  and  already  propositions  for  an  old-age  pension 
law,  covering  all  the  states  of  the  Federation,  have  been 
considered.  It  is  claimed  that  insurance  companies  are  not 
at  all  affected  by  the  old-age  pension  law,  and  it  is  evident 
that  the  spirit  of  self-help,  self-support,  and  thrift  has  not 
been  weakened.  The  people  of  Australasia  are  quite  in 
advance  of  the  people  of  the  mother  country  in  savings. 
Only  recently  have  the  states  begun  to  pension  their  civil 
servants.  The  managers  of  great  industries  have  further- 
more introduced  pensions  similar  to  those  in  Great  Britain 
and  the  United  States.  The  states  of  Australasia  have 
developed  public  insurance  agencies  to  reduce  the  cost  of 
life  insurance,  and  private  companies,  like  our  industrial 
insurance  societies,  carry  on  an  extensive  business. 

Accident  insurance. — The  legislation  of  New  Zealand 
and  other  states  has  followed  the  development  of  English 
law.  In  the  year  1854,  the  cruel  earlier  law  of  liability, 
which  denied  relief  to  the  family  of  a  workman  killed  by 


LAWS  ON  INDUSTRIAL  INSURANCE  39 

accident,  was  modified,  and  a  form  of  the  Lord  Campbell 
legislation  was  introduced.  The  English  employers'  liability 
law  of  1880  was  followed  by  New  Zealand  in  1882.  This 
act  gave  to  the  injured  workman,  in  relation  to  his  employer, 
the  same  rights  for  indemnity  which  any  other  person  would 
have  in  respect  to  the  person  who  injures  him ;  but  this  law 
worked  so  badly  that  it  was  found  desirable,  after  1897, 
to  introduce  the  workmen's  compensation  act,  according  to 
the  example  of  the  mother  country.  The  amount  which 
can  be  collected  under  the  liability  law  has  always  been 
limited  in  Australasia,  as  in  Great  Britain,  to  conform  to  the 
income  of  the  workman  injured.  The  Compensation  Act 
of  England  was  introduced  into  the  Australasian  states 
after  1897,  but  it  is  limited  to  certain  occupations,  while  the 
employer's  liability  law,  still  remaining  valid,  covers  all 
kinds  of  occupations. 

In  New  Zealand  the  employers  are  left  entirely  free  to 
choose  any  method  of  insurance.  Since,  naturally,  many 
employers  feel  the  need  of  liability  insurance  or  of  a  collect- 
ive workmen's  insurance,  there  is  a  considerable  demand 
for  private  insurance,  and  state  supervision  of  these  under- 
takings is  required.  New  Zealand  enacted  a  law,  October 
2,  1902,  but  other  states  have  not  imitated  the  example,  nor 
have  other  Australasian  states  followed  the  example  of 
New  Zealand,  which  in  1900  established  in  its  state  insur- 
ance department  a  division  for  accident  and  liability  in- 
surance, chiefly  to  afford  the  managers  cheaper  premiums 
for  insurance.  The  policies  of  the  state  insurance  depart- 
ment cover  the  liability  of  the  manager  in  relation  to  his 
workmen,  up  to  the  amount  of  £500  for  each  workman. 
Premiums  are  graduated  according  to  the  wages,  and  vary 
from  6  s.,  for  £100  wages  up  to  65  s.,  in  the  case  of  danger- 
ous occupations.  In  1905  the  premiums  of  the  state  depart- 
ment amounted  to  £23,970,  and  indemnities  to  £11,242. 


40  INDUSTRIAL  INSURANCE 

Sickness  insurance. — It  has  been  honestly  feared  by 
many  opponents  of  state  care  of  old-age  pensions  that  the 
voluntary  organization  of  self-help  and  thrift  would  be 
diminished  by  dependence  on  the  state.  So  far  as  the  facts 
in  respect  to  Australasia  are  concerned,  this  fear  is  not 
justified.  The  friendly  societies,  which  are  the  most  popular 
and  useful  form  of  insurance  co-operation,  have  flourished 
in,  a  remarkable  degree  in  Australasia.  The  English 
colonists  took  with  them  their  friendly  society  ideas,  and 
developed  them  in  the  largest  extent.  In  seven  states,  in  the 
year  1906,  there  were  4,446  associations  with  379,661  mem- 
bers. Each  local  society  had  on  the  average  85  members, 
and  it  is  estimated  that  more  than  30  per  cent,  of  the  entire 
population  of  Australasia  shares  the  advantages  of  these 
friendly  societies.  When  we  consider  that  in  Great  Britain 
and  Ireland  the  property  of  the  friendly  societies,  per  head 
of  population,  is  only  £5,  8  s.,  10  d.,  and  that  it  is  £i  i,  15  s., 
i  d.,  in  Australia,  and  that  the  average  savings,  per  head, 
in  Great  Britain  and  Ireland  are  £5,  7  s.,  8  d.,  and  in  Aus- 
tralia £8,  19  s.}  ii  d.,  it  would  appear  that  the  population  of 
these  "socialistic"  states  has  developed  a  greater  spirit  of 
thrift  and  of  self-help  than  is  known  in  the  mother  country, 
which  has  long  opposed  any  socialistic  experiments.  Natu- 
rally, these  friendly  societies,  which  were  founded  at  first 
simply  for  mutual,  charitable  relief,  have  required  constant 
improvement  from  actuarial  criticism  and  from  state  legisla- 
tion, but  the  associations  have  gradually  taken  scientific 
ground,  and  offer,  with  state  supervision,  a  sound  insurance. 
The  trades  unions  have  done  some  work  in  the  field  of 
insurance,  but  their  principal  purpose  has  been  to  improve 
wages  and  conditions  of  work  people. 


CHAPTER  I 

THE    EXTENT   AND    NATURE    OF    THE    DEMAND    FOR    A 

SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE  IN 

THE  UNITED  STATES 

i.  The  economic  condition  of  wage- workers  calls  for  in- 
surance as  a  necessary  part  of  their  protection  against 
dependence  and  suffering.  While  the  statistical  material 
for  determining  the  number  of  persons  requiring  social 
insurance  is  not  entirely  satisfactory,  it  does  enable  us  to 
make  a  fairly  accurate  estimate  for  our  purpose.  There 
is  a  common  assumption  in  this  country  that  the  wages  of 
workingmen  are  so  high  that  social  insurance  is  not  desir- 
able; that,  with  the  ordinary  private  associations  and  insur- 
ance companies  at  hand,  there  is  no  demand  for  collective 
effort,  with  some  measure  of  governmental  intervention, 
stimulus,  and  regulation.  It  is  not  necessary  to  exaggerate 
poverty  to  prove  the  need  of  a  social  policy  of  insurance. 
This  is  demonstrated  by  the  fact  that  it  is  precisely  the  men 
of  the  successful  classes  who  realize  the  wisdom  of  distribut- 
ing risks,  and  of  providing  a  fund  in  case  of  incapacity  for 
labor  or  of  death  by  the  method  of  insurance  rather  than  by 
depending  entirely  on  savings  and  investments.  If  the 
ordinary  professional  man  should  wait  until  his  investments 
would  provide  for  his  needs  in  long  illness  or  for  his  family 
in  case  of  his  death,  during  the  first  part  of  his  career,  the 
family  would  be  practically  within  a  few  months  of  depend- 
ence on  charity.  On  the  other  hand,  no  system  of  saving 
or  of  insurance  can  do  much  for  the  non-industrial  classes, 
as  idiots,  insane,  paupers  of  all  categories,  vagabonds,  and 
criminals.  Workingmen;s  insurance  can  help  only  working- 
men — those  who  spend  most  of  their  lives  earning  a  living 

41 


42  INDUSTRIAL  INSURANCE 

and  who  are  paid  wages  or  small  salaries.  For  defectives 
and  paupers  industrial  insurance  is  inapplicable,  and  these 
must  be  supported  by  public  or  private  relief;  while  delin- 
quents are  placed  under  public  control  at  compulsory  labor 
in  coercive  institutions.  People  of  wealth  can  easily  protect 
themselves  by  investments  or  by  insurance  in  private  com- 
panies. If  they  pay  too  much  for  this  benefit,  their  business 
training  enables  them  to  discover  legal  means  of  redress  and 
correction.  But  the  majority  of  wage-earners  are  not  in  like 
situation  and  require  some  form  of  collective  action. 

In  this  connection  we  must  determine  as  accurately  as 
possible  who  should  receive  the  advantages  of  a  social  policy 
of  insurance.  Various  attempts  have  been  made  to  estimate 
the  average  income  necessary  to  prevent  dependence  on 
public  relief  and  private  charity.  The  average  income  will 
vary  in  purchasing  power  in  different  localities,  and  large 
sections  of  the  population  do  not  enjoy  the  average  rate  of 
earnings.  In  certain  occupations  the  workers  live  in  cities 
where  rent  and  food  are  unduly  expensive,  and  yet  their 
earnings  are  made  low  by  competition  among  themselves,  as 
in  the  needle  industries  in  New  York  and  Chicago.  To 
speak  of  the  average  earnings  in  this  connection  is  often 
misleading  mockery.  We  may,  however,  give  estimates  of 
careful  observers  in  relation  to  the  margin  of  dependence 
on  relief. 

Mr.  P.  Roberts  says :  "It  was  shown  by  the  Bureau  of 
Statistics  of  Massachusetts  that  it  takes  for  a  family  of  five 
persons  $754  a  year  to  live."  l  This  does  not  give  the 
minimum  standard  of  bare  existence,  but  a  reasonable  stand- 
ard of  comfort  and  that  only  for  certain  areas  in  the  state  of 
Massachusetts.  It  would  not  apply  to  the  negroes  of  South 
Carolina,  where  one  of  their  families  might  regard  an  in- 
come of  $400  a  year  as  luxury. 

1  Anthracite  Coal  Communities,  p.  346. 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         43 

The  minimum  standard  means  the  income  below 
which  an  average  family  cannot  fall  without  reducing  in- 
dustrial efficiency  and  becoming  to  some  extent  dependent. 
Dr.  E.  T.  Devine,  whose  experience  as  secretary  of  the 
Charity  Organization  Society  of  New  York  gives  his  judg- 
ment special  weight,  thought  that  the  minimum  income  on 
which  it  is  practicable  to  remain  self-supporting,  and  to 
maintain  a  decent  standard  of  living,  was  $600  a  year  in 
his  city.  In  1904  he  thought  that  the  amount  should  be 
placed  at  $700  on  account  of  the  rise  in  cost  of  articles  neces- 
sary to  maintain  existence.  In  1907,  in  view  of  more  recent 
studies,  he  inclines  to  raise  this  figure  very  much.2  Here 
again  the  minimum  standard  is  explicitly  reckoned  for  the 
largest  and  most  crowded  city  in  the  United  States,  where 
rents  are  highest,  food  most  costly,  and  the  cold  climate 
demands  good  house  shelter,  much  fuel,  and  warm  woolen 
clothing. 

Generally  speaking,  the  class  of  persons  who  need  and 
can  receive  benefit  from  any  system  of  collective  insurance 
are,  on  the  one  side,  not  the  wealthy,  nor,  on  the  other  side, 
the  dependents,  defectives,  and  delinquents,  but,  actually,  the 
vast  majority  .of  those  who  live  on  small  wages  or  salaries, 
and  who,  in  a  struggle  to  live  decently  and  educate  their 
children,  have  difficulty  in  "making  ends  meet."  In  fact, 
this  description  covers  much  more  than  half  the  population; 
that  is,  in  the  United  States,  perhaps  now  over  40,000,000 
persons,  bread-winners  and  members  of  their  families  de- 
pendent on  them  for  a  living.  This  is  an  under  estimate, 
but  it  is  a  number  large  enough  to  present  a  problem  worthy 
of  arousing  the  attention  of  scholars  and  statesmen.  It  is 
not  worthy  of  a  nation  like  ours  to  regard  social  care  as 
merely  a  means  of  keeping  the  weakest  members  from  abject 

3  Principles  of  Relief,  pp.  34-36;  cf.  Charities  and  Commons,  Novem- 
zer  17,  1906. 


44  INDUSTRIAL  INSURANCE 

misery  and  death  by  starvation.  The  aim  of  social  insurance 
is  not  only  to  "keep  the  wolf  from  the  door,"  but  to  keep 
him  so  far  away  that  he  cannot  destroy  sleep  with  his  howls. 
The  wage- worker  has  special  claims  upon  collective  con- 
sideration because  he  no  longer  has  any  ownership  in  the 
materials  and  instruments  of  production,  nor  any  voice  in 
management  of  the  process  nor  control  of  the  conditions 
under  which  his  body  and  mind  may  suffer.  It  is  this  fact, 
and  not  their  absolute  misery,  which  gives  the  members  of 
the  wage-earning  group  a  special  right  to  the  consideration 
of  lawmaking  bodies.  The  employers  enjoy  armed  protec- 
tion of  their  lives  and  property,  without  which  they  would 
be  at  the  mercy  of  the  majority  who  are  in  inferior  economic 
position.  No  class  of  persons  receive  relatively  so  much  help 
from  government  as  the  rich.  Over  against  this  is  the 
interest  of  the  wage-earners  in  having  their  fortunes  pro- 
tected by  a  power  which  is  above  all  and  which  is  directed  by 
the  representatives  of  all. 

The  extent  of  the  group  under  consideration  cannot  be 
measured  with  desirable  exactness,  but  for  practical  purposes 
the  following  analysis  will  aid  the  judgment.  The  total 
population  of  the  United  States,  according  to  the  Twelfth 
Census,  including  Alaska,  Hawaii,  Indian  Territory,  Indians 
on  reservations,  was  76,303,387  (75,693,734  without  count- 
ing the  persons  in  districts  named),  of  whom  66,890,199 
were  whites  and  8,803,535  of  African  descent.3 

The  number  of  persons  at  least  ten  years  of  age  who 
were  engaged  in  gainful  occupations  was  given  in  the  last 
census.4  Only  a  part  of  the  more  significant  facts  are  here, 
reproduced.  Of  10,381,765  engaged  in  agricultural  pur- 
suits, 4,410,877  are  called  agricultural  laborers  and  5,674,- 

s  Statistical  Abstract,   1903,  p.  22.     The  Statistical  Abstract  for   1907 
(p.  686)   estimates  the  population  at  85,817,239. 
4  Ibid.,  pp.  494-97- 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         45 

875  farmers,  planters,  and  overseers.  Many  other  laborers 
are  lumbermen,  raftsmen,  wood-choppers,  etc.  The  negro 
laborers  of  the  south  must  be  studied  apart. 

In  the  group  "professional  services"  we  notice  that 
teachers  and  professors  in  colleges  number  446,133,  the 
majority  of  whom  require  some  form  of  insurance,  espec- 
ially for  sickness,  invalidism,  and  old  age,  since  they  are  on 
low  salaries.5  The  "trade  and  transportation"  group  in- 
cludes persons  of  widely  differing  incomes,  but  nearly  all 
need  industrial  insurance,  and  it  is  with  this  group  that  the 
most  reliable  insurance  schemes  have  already  been  organized. 
There  were  in  this  class  4,766,964  persons. 

In  the  group  devoted  to  "manufacturing  and  mechanical 
pursuits"  there  were  7,085,992  persons  (5,772,788  males 
and  1,313,204  females).  The  great  majority  of  these  are 
wage-workers  or  employees  on  small  salaries,  and  need 
industrial  insurance  in  all  its  forms.  The  employees  are  not 
separated  from  the  employers  in  this  enumeration.  It  is 
well  known  that  the  tendency  is  to  increase  the  relative  ratio 
of  wage-workers  to  employers  where  the  great  industry 
prevails.  The  total  number  of  persons  above  ten  years  of 
age  in  "gainful  occupation"  was  29,074,117  (23,754,205 
males,  5,319,912  females). 

Of  family  incomes  of  workingmen  in  the  United  States 
we  have  a  valuable  recent  study  based  on  investigations  of 
the  conditions  of  life  for  25,440  families  in  various  callings 
and  districts.  The  data  were  gathered  in  the  principal  indus- 
trial centers  of  thirty-three  states,  including  the  District  of 
Columbia.6  The  investigation  was  restricted  to  families  of 
wage-workers  and  of  persons  on  salaries  not  exceeding 

5  National  Education  Association,  Report  of  Committee  on  Salaries, 
Tenure,  and  Pensions  of  Public-School  Teachers  in  the  United  States, 
1905. 

*  Eighteenth  Annual  Report  of  the  Commissioner  of  Labor,  1903: 
"Cost  of  Living  and  Retail  Prices  of  Food." 


46  INDUSTRIAL  INSURANCE 

$1,200  a  year,  and  persons  engaged  in  business  on  their 
own  account  were  not  considered.  The  facts  refer  chiefly 
to  the  year  1901.  We  may  select  one  of  the  most  general 
statements  of  income : 

The  total  family  income  varied  from  $908.68  in  Colorado  to  $420.03 
in  South  Carolina.  In  eight  states  the  income  was  above  $800  per  year, 
in  twelve  states  between  $700  and  $800,  in  ten  states  between  $600  and 
$700,  in  two  states  between  $500  and  $600,  and  in  one  state  below 
$500.  The  largest  average  income  per  family  from  all  sources  in 
any  of  the  geographical  divisions  was  $883.39,  reported  for  the  West- 
ern states.  In  the  North  Atlantic  states  it  was  $755.49;  in  the  North 
Central  states  it  was  $751.62;  in  the  South  Atlantic  states  it  was 
$690.80;  and  in  the  South  Central  states  it  was  $675.42. 

These  family  incomes  were  made  up  from  several  sources : 
Expressed  in  percentages,  these  figures  would  show  that  79.49  per 
cent,  of  the  average  income  of  all  families  came  from  the  earnings  of 
husbands,  1.47  per  cent,  from  the  earnings  of  wives,  9.49  per  cent, 
from  the  earnings  of  children,  7.78  per  cent,  from  boarders  and 
lodgers,  and  1.77  per  cent,  from  other  sources.7 

The  difficulty  of  representing  the  actual  condition  of 
many  families  through  these  general  statements  has  been 
felt  by  all  students.  Professor  Mayo-Smith,  on  the  basis 
of  earlier  data,  ventured  the  statement,  with  very  strong 
qualifications  as  to  the  value  of  the  estimates,  that  the  aver- 
age annual  earnings  for  all  employees,  in  1890,  excluding 
officers,  firm  members,  and  clerks,  was  $444.83. 

This  figure  is,  perhaps,  the  nearest  approach  we  have  to  an  average 
wage  for  the  United  States.  It  is  not,  however,  a  typical  wage,  for 
the  reason  that  it  includes  the  wages  of  men,  women,  and  children,  of 
apprentices  and  piece-workers. 

The  figures  given  indicate  the  narrow  margin  between 
income  and  subsistence.  A  few  weeks  of  sickness  or  inca- 
pacity through  accidents,  and  the  meager  reserve  is  con- 
sumed, and  the  family  faces  want  and  dependence  on 

7  Eighteenth  Annual  Report  of  the  Commissioner  of  Labor,  1903: 
"Cost  of  Living  and  Retail  Prices  of  Food,"  p.  58. 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         47 

charity ;  for  the  little  savings  and  feeble  credit  on  honor  or 
pawn  will  not  go  far.  The  statistics  of  charity  give  a 
picture,  though  as  yet  very  imperfect,  of  the  number  of 
families  who  each  year  cross  this  line,  and  eat  the  bitter 
bread  of  public  or  private  relief;  but  no  statistics  which  can 
ever  be  gathered  can  visualize  the  conditions  of  constant 
dread  of  suffering  and  pauperism  which  are  the  hourly 
torment  of  thoughtful  workingmen. 

If  we  turn  to  the  question  of  savings,  we  encounter 
serious  complications ;  for  the  deposits  in  savings  banks  are 
composed  of  the  savings  of  persons  of  all  classes.  In  the 
Report  just  cited  it  is  said  that  of  2,567  families  studied,- 
1,480  families  had  a  surplus  at  the  end  of  the  year,  and  dis- 
posed of  it  as  follows:  kept  it  on  hand,  491  families;  placed 
it  in  bank,  682  families;  invested  in  building  associations, 
63 ;  in  real  estate,  42 ;  in  shares  of  stock,  5 ;  loaned  money, 
3;  paid  debts,  60;  other  methods,  i;  not  reported,  133 
families.8 

The  Statistical  Abstract  for  1903  (p.  72)  stated  that  in 
the  United  States,  in  1902-3,  there  were  7,035,228  deposit-  , 
ors  in  the  savings  banks;  the  amount  of  their  deposits  was 
$2>935>2°4>845;  the  average  to  the  credit  of  each  depositor, 
$417.21.  But  this  gives  little  direct  light  on  our  subject, 
because  the  social  and  financial  classification  of  depositors 
is  not  given.9 

It  would  be  interesting  to  know  how  far  the  savings  of 
workingmen  are  invested  in  some  form  of  insurance;  and 
here  we  have  considerable  information,  but  not  much  that  is 
encouraging.  Of  2,567  families  reported  to  the  commis- 
sioner of  labor,  806  held  insurance  on  property  and  1,689 

8  Op.  cit.,  p.  512. 

9  Ibid.,  pp.  421-69,   501.     The  Statistical  Abstract  for   1907    (p.   618) 
gives  number  of  depositors,  8,588,811;  amount  of  deposits,  $3,690,078,945; 
average  to  each  depositor,  $429.64. 


j.5  INDUSTRIAL  INSURANCE 

cm  fife;  944  paid  does  to  labor  organizations,  and  1,123  to 
other  kinds  of  organizations,  including  a  certain  sum  for 
insurance.  On  the  surface  the  showing  is  very  impressive. 
There  were  in  the  year  1902,  in  the  United  States,  4,160,088 
policies  of  the  ordinary  form,  with  annual  payments  of 
premium,  or  at  least  infrequent  payments,  in  force.  The 
face  value  of  these  policies  was  $8,701,587,912. 

The  total  income  of  all  companies  was  $504,527,705,  and 
payments  to  policy-holders  $199,883,721;  the  assets,  $2,- 
091,822,851;  the  surplus,  $293,685,990;  the  number  of 
policies  of  all  kinds,  17,608^212;  and  their  value,  Sio.- 


If  we  turn  to  the  "industrial"  companies,  we  have  to 
deal  with  insurance  which  really  touches  vitally  die  working 
people  on  small  incomes,  and  in  these  companies  we  find 
13.448,124  policies,  with  a  face  value  of  $1,806,890.864. 
The  average  amount  of  each  policy  is  small  —  about  $135.  10 
This  analysis  win  be  carried  further  in  the  discussion  of 


Another  point  of  view  may  be  taken  for  the  considera- 
tion of  die  need  of  insurance  of  workingmen  in  this  country. 
Have  they  accumulations  of  wealth  which  will  furnish  them 
credit  in  case  of  incapacity  for  daily  labor?  Here  again 
the  averages  of  wealth  per  inhabitant,  tnrTnHing  billionaires 
and  day  laborers,  are  absolutely  deceptive.  Though  often 
cited  by  political  partisans  to  prove  the  extraordinary  pros- 
perity of  wage-earners,  they  have  no  value  for  any  such 
purpose.  And  when  we  come  to  classify  the  population  by 
income  we  confront  serious,  perhaps  insuperable,  difficulties. 
C  D.  Wright  says:  "American  statistics  do  not  warrant  any 
very  careful  classification  of  the  distribution  of  wealth."11 


Abstract,  1903,  p.  421,  prepared  by  Frederick  L.   Hoff- 

^f.    ^*.__     •»%         *  __  A*_-»     **  ,    .  ,  -   .   __ 

ox  \mt  mntmui  company. 
Prmc*cml  Socwtogj,  Sfk  ed,  rer.,  1902,  p. 


SOCIAL  POLICY  OF  INDUSTRIAL  IXSURAXCE         49 
He  quotes  Mulhafl's  f^mat^  for  England: 


2.  There  is  a  marked  tendency  in  aH  modem 
to  form  a  group  of  families  dependent  on  wages  or  small 
salaries  for  their  firing.  These  are  in  a  certain  degree 
dependent  on  managers  of  capital  even  for  the  opportunity 
of  labor  and  for  the  «Vigi  minatinm  of  the  mndilinHH  of  fife. 

In  no  country  is  the  growth  of  the  great  imfus!  ry  mote 

marKCu  rtmn  in  Tii^  United  ^f^f^c.    it  is  1^  IP?  that, 
cultural  occnpatioos  have  not  yet  CCTIJ^  info  this 
and  t  h^M  w^fy  many  nino^ysrt'e  iiKinPt^Te^  are  tanrw 
ous  and  have  a  prospect  for  the  future.    But  tfa^y  eddies 
not  divert  our  attention  froui  the  mam  direction  of 


l  df  nHfl«i|»iifirt-      Tti^  ^nlargf^nrni'  and  rrmrmti^linM 

of  the  class  of  wage-earners  are  facts  of  vital  importance  in 
relation  to  the  need  of  social  insurance.  The  numgci  of 
business  finds  in  the  business  itself  means  of  invesOucut  and 
a  pnmaon  for  periods  of  incapacity  for  active  labor  —  a 
store  which  he  can  personally  control  The  well-paid  pro- 
fessional man  can  support  himself  m  periods  of  Vi^inf  ^  in 
skioiess  and  old  age,  out  of  fiiuiifLil  reserves  iuve&tcd  in 
productive  funds.  The  farmer  can  rely  upon  a  mortgage 
or  sale  of  lands  or  cattle  for  credit  or  income  while  he  is 
laid  aside  ijxuki  personal  industry.  But  the  wage-worker 

^T^r".rri--"'"   _"_Vr"5   IT.    .."  rf   ~'".~~~   1  __   _~lr   J  T  "  5"JL~  r'5   "V.15*    r*r   ?•!_  1 

for  in  money;  the  wages  of  most  members  of  this  class  fur- 

T:5;:  s-j.ir.T  TT'^'^r:"   ;:  5.:r?.u?  ~~~  :r.'-'-^sn~'.-z.r.~    ~:~.-? 
tion  of  a  fund  winch  win  provide 


50  INDUSTRIAL  INSURANCE 

a  long  and  painful  process ;  and  thus  the  only  reliable  method 
of  providing  surely  and  at  the  beginning  of  need  for  emer- 
gencies is  insurance.  A.  Manes12  says : 

This  brings  us  to  the  difference  between  saving  and  insurance.  He 
who  saves  in  order  to  meet  a  future  expenditure  must  have  enough 
time  for  it.  He  who  insures  himself  is  protected  from  the  moment 
he  takes  out  a  policy,  however  small  his  first  premium.  He  who 
undertakes  each  year  to  set  aside  1,000  marks  in  order  to  leave  to  his 
heirs  in  case  of  death  a  large  capital,  but  who  dies  in  the  first  year, 
leaves  merely  1,000  marks  increased  by  interest.  But  he  who  insures 
himself  for  10,000  marks  and  dies  after  paying  a  few  marks  in 

premiums  leaves  to  his  heirs  10,000  marks The  saver  is  isolated. 

He  cares  only  for  himself.  His  savings  help  only  himself  or  his 
family.  Insurance  is  in  strong  contrast  and  rests  on  the  principle:  All 
for  each,  each  for  all. 

The  table  shows  by  an  example  the  advantage  of  insur- 
ance over  savings.  The  case  is  one  of  a  man  thirty-five  years 
of  age  insured  for  10,000  marks  in  a  company,  and  the 
corresponding  savings,  interest  at  3  per  cent.  The  sum  of 
the  premiums,  if  placed  in  a  savings  bank,  will  not  equal  the 
sum  given  by  the  policy  until  nearly  the  end  of  twenty-five 
years.  If  the  insured  dies  before  that  time  his  heirs  receive 
more  than  the  savings  would  give,  and  much  more  if  he  dies 
within  a  few  years.  If  he  lives  to  the  end  of  the  twenty-five 
years  and  takes  the  10,000  marks  he  can  put  that  out  at 
interest  and  receive  a  fair  income.  If  the  insurance  prem- 
iums are  not  taxed,  as  in  some  countries  is  true,  there  is  a 
further  gain  over  savings. 

Investments  in  the  securities  offered  by  industrial  and 
commercial  companies,  even  if  there  are  savings  to  invest, 
seem  to  the  person  unacquainted  with  this  world  of  specu- 
lators as  little  better  than  gambling.  Secure  bonds  render 
slight  returns. 

The  tendency  toward  the  enlargement  of  a  class  of  per- 

12  Versicherungswesen,  pp.   1 1 ,  12. 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         51 


TABLE  I 
INSURANCE  FOR  10,000  MARKS,  PAYABLE  AT  DEATH  OR  AFTER  25  YEARS 


Number  of  Years  Paid  by 
Insured  Beginning  at 
Age  Thirty-five 

Annual 
Premium 

Sum  of  Savings, 
plus  Interest  at 
3  per  cent. 

Sum 
Insured 

Sum  of  Insurance 
Payable  above 
the  Savings 

I 

Marks 
421  oo 

Marks 

d.21 

Marks 
IO  OOO 

Marks 

2 

421  oo 

8« 

IO  OOO 

O/v 

•3 

421  oo 

I   3OI 

IO  OOO 

y>-l45 
8  600 

421  oo 

i  761 

IO  OOO 

o,uyy 
8  23O 

4.       .       . 

421  oo 

2  23  5 

IO  OOO 

°>^OV 
7  76c 

6 

•2  2O     8O 

/>/uD 

7~ 

•212    4O 

3OI  £ 

>377 
6  o8c 

8  

30^.00 

>v*3 

•7  411 

IO  OOO 

u>y°5 
6  <8o 

2O8    4.O 

•7  8l2 

IO  OOO 

6  188 

10     

2OO   7O 

4217 

IO  OOO 

5782 

ii  

282    90 

A  627 

IO  OOO 

>/°o 

12  

274.  oo 

5O4.O 

IO  OOO 

0>O/O 

13.  • 

266    8O 

C  ACS 

IO  OOO 

14  

2^8.  <O 

*  881 

IO  OOO 

A    TTQ 

je 

2dO   OO 

6  3O7 

16         .... 

241  oo 

6  737 

j°93 

17.  . 

231    80 

7  171 

>^UJ 

2  82O 

18  

222    40 

7  608 

IO  OOO 

IQ 

212    7O 

^>ov^ 

2O 

2O2    60 

°>u4y 

I>951 

21 

IO2    3O 

o°° 

22 

181  60 

>°59 

23 

I7O    ^O 

y>ovu 

O  8.d.3 

24. 

I  ^O    OO 

y>°4o 

IO  2O7 

J57 

2Z. 

147    IO 

**ni*yVr 

6,928.  20 

sons  dependent  on  wages  is  indicated  in  this  citation  from 
Mayo-Smith : 

While  population  from  1880  to  1890  increased  24.6  per  cent.,  the 
number  of  persons  ten  years  of  age  and  over  engaged  in  gainful  occu- 
pations increased  30.7  per  cent.  The  increase  in  agriculture,  fisheries, 
and  mining  was,  however,  only  12.6  per  cent.,  and  in  domestic  and 
personal  services,  24.5  per  cent.  On  the  other  hand,  the  number  of 
persons  engaged  in  professional  services  increased  56.6  per  cent.;  in 
manufacturing  and  mechanical  industries,  49.1  per  cent.;  and  in  trade 
and  transportation,  78.2  per  cent.18 

13  Mayo-Smith,  Statistics  and  Economics,  p.   70. 


52  INDUSTRIAL  INSURANCE 

This  means  that  most  of  the  workers  are  absolutely  without 
hope  of  escaping  from  a  position  in  which  they  depend  on 
capitalists  for  employment,  and  that  their  permanent  inter- 
ests are  with  their  own  group.  The  same  writer  presents 
further  illustrations  in  the  words : 

In  the  manufacture  of  agricultural  implements  the  number  of 
establishments  decreased  1,033  or  53  per  cent,  while  the  number  of 
employees  increased  2,964  or  7.5  per  cent.,  and  the  value  of  the 
products  twelve  million  dollars  or  18.4  per  cent.1* 

In  the  manufacture  of  boots  and  shoes,  gristmills,  paper 
factories,  cotton-mills,  the  same  tendency  is  observed.  But 
the  fact  is  too  familiar  and  obvious  to  require  further 
mention. 

3.  The  necessity  for  providing  industrial  insurance  has 
become  acute.  If  the  nation  only  knew  the  facts,  there  would 
be  radical  legislation  within  a  short  time.  But,  as  a  matter 
of  fact,  men  of  the  business  world,  forced  by  the  absurd 
employers'  liability  laws,  have  followed  a  policy  of  conceal- 
ment as  by  a  universal  instinct.  Of  occupational  accidents 
we  gain  suggestive  glimpses,  but  of  the  causes  of  disease  and 
premature  age  and  death  in  industries  we  have  in  this  coun- 
try little  information  either  from  governments  or  from 
insurance  companies.  The  insurance  companies  are  ap- 
parently afraid  to  join  in  a  comparative  study  of  their  own 
experience,  for  fear  their  competitors  will  use  the  informa- 
tion. And  so  we  are  compelled  to  put  together  mere  frag- 
ments of  knowledge,  and  hope  that  the  general  and  sl^ate 
governments  will  pursue  the  study,  and  thus  awaken  general 
interest  and  direct  action.  Only  in  the  reports  of  the  Inter- 
state Commerce  Commission  have  we  fairly  satisfactory 
reports  of  accidents  to  passengers,  workmen,  and  others. 
The  laws  of  eleven  states  require  reports  of  accidents  in 
factories,  but  only  one  state  is  attempting  to  secure  reports 

14  Mayo-Smith,   Statistics  and  Economics,   p.    173. 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         53 

of  accidents  in  all  industries.  The  state  of  Wisconsin  passed 
a  law  in  1905  which  makes  it  the  duty  of  physicians  to 
report  all  accidents  which  result  in  the  serious  injury  of 
workmen  and  cause  incapacity  for  work  during  a  period  of 
more  than  two  weeks.  In  the  Eleventh  Annual  Report  of 
the  Department  of  Inspection  of  Indiana  (1907)  it  is  said: 

There  have  been  reported  during  the  year  ....  2,287  accidents. 
Of  these,  62  were  fatal,  454  serious,  455  slight,  the  latter  causing  the 
loss  of  five  to  twenty-five  days'  time,  and  1,316  very  slight  accidents, 
resulting  in  loss  of  less  than  five  days'  time. 

From  the  table  it  appears  that  the  average  age  of  the 
person  injured  was  20.4  years ;  extremes  of  age  14-65  years. 
Out  of  924  cases,  467  were  heads  of  families  and  457  not 
heads  of  families;  491  were  injured  on  machinery  and  269 
otherwise;  235  on  guarded  machinery  and  189  on  machinery 
not  guarded.  The  highest  loss  of  wages  was  $£oo,  the  least 
$i.  Wages  were  paid  by  employers  during  disability  in  163 
cases  in  amounts  from  $i  to  $300.  Burial  or  medical  ex- 
penses were  paid  in  395  cases  in  amounts  from  50  cents  to 
$308,  and  in  80  cases  the  amount  not  being  stated — by  the 
company  in  315  cases  ($7,862.49)  ;  by  the  insurance  com- 
pany in  68  cases;  by  the  insurance  company  and  employing 
company  in  4  cases;  by  the  man  himself  in  25  cases;  by  the 
insurance  company  and  the  injured  in  i  case;  by  self  and 
employee  in  5  cases.  In  151  cases  from  i  to  10  persons  were 
dependent  on  the  injured  workman. 

The  Bureau  of  Labor  Statistics  of  Illinois  published  in 
1908  its  first  report  for  six  months  on  industrial  accidents 
under  a  law  which  requires  employers  to  report  accidents 
which  cause  disability  of  thirty  days  or  more.  During  the 
six  months  ending  December  31,  1907,  there  were  reported 
1,392  casualties;  of  which  298,  or  21.4  per  cent.,  resulted  in 
death  and  1,094,  or  78.6  per  cent.,  were  not  fatal  but  caused 
disability  for  at  least  thirty  days. 


54  INDUSTRIAL  INSURANCE 

The  most  valuable  recent  report  is  that  of  Wisconsin 
(Thirteenth  Biennial  Report  of  the  Bureau  of  Labor  and 
Industrial  Statistics,  1907-8).  The  total  number  of  injuries 
reported  from  October  i,  1906,  to  October  i,  1907,  was 
13,572,  of  whom  7,186,  or  53  per  cent.,  were  of  workmen 
engaged  in  their  employment,  the  others  being  accidents  to 
those  either  not  at  work  or  at  work  for  themselves.  The 
reports  are  made  to  the  State  Board  of  Health  by  physicians 
and  cover  injuries  to  all  persons  if  the  accident  causes  disa- 
bility o.ver  two  weeks.  Of  the  7,186  injured  in  the  course 
of  occupation  7,030  were  male  and  156  female;  married 
3,130,  single  3,875,  unknown  181.  The  fatal  injuries  were 
2.8  per  cent. ;  non- fatal  but  permanent,  14.4  per  cent. ;  tem- 
porary, 80.9  per  cent. 

The  cost  to  employers  of  injured  workmen  in  503  estab- 
lishments in  1906  was:  for  employers'  liability  premiums, 
$135,370.49;  for  workmen's  collective  accident  premiums, 
$13,489.03;  for  all  other  expenses,  including  sums  paid 
directly,  medical  aid,  and  wages  allowed,  $36,774.30;  total 
expense,  $185,633.82;  of  which  seven  employees  received 
$84,430.39,  or  45.49  per  cent. 

One  of  the  most  important  casualty  companies  has  given 
out  certain  figures  which  they  have  made  in  connection 
with  insuring  employers  from  loss  occasioned  by  damage 
suits  of  injured  workmen.  During  the  years  1889-1903 
this  company  issued  policies  to  employers  who  paid  out 
$1,905,515,398  in  wages  to  about  3,811,030  workmen,  and 
in  this  number  there  occurred  185,088  accidents.  After 
bringing  together  all  the  evidence  he  could  collect,  Dr. 
Josiah  Strong  estimates  the  number  of  killed  and  wounded 
in  the  army  of  labor  at  over  550,000  annually.  This  does 
not  include  the  sickness  and  death  caused  by  occupations. 

This  is  50  per  cent,  more  than  all  the  killed  and  wounded  in  the 
late  war  between  Japan  and  Russia.  There  are  more  casualties  on  our 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         55 

railways  in  a  single  year  than  there  were  on  both  sides  of  the  Boer 

war    in    three    years There   were    twenty-four    times    as    many 

casualties  on  our  railways  in  one  year  as  our  army  suffered  in  the 

Philippine  war   in   three   years    and   three   months Taking  the 

lowest  of  our  three  estimates  of  industrial  accidents,  the  total  number 
of  casualties  suffered  by  our  industrial  army  in  one  year  is  equal  to 
the  average  annual  casualties  of  our  Civil  War,  plus  those  of  the 
Philippine  war,  plus  those  of  the  Russian  and  Japanese  war.15 

The  hazard  varies,  of  course,  in  different  occupations. 
In  an  investigation  made  in  New  York  for  1899  and  cover- 
ing selected  industries  it  was  found  that  the  number  in  1 ,000 
injured  was  in  stone  and  clay  products,  15.18;  metals, 
machinery  and  apparatus,  26.57;  wood,  18.42;  leather, 
rubber,  pearl,  etc.,  3.21;  chemicals,  oils,  and  explosives, 
44.06;  pulp,  paper,  and  cardboard,  41.46;  printing  and 
allied  trades,  9.19;  textiles,  8.91;  clothing,  millinery,  laun- 
dering, etc.,  1.35;  food,  tobacco,  and  liquors,  13.51;  public 
utilities,  37.28;  building  industry,  26.20.  Mr.  F.  L.  Hoff- 
man estimates  the  average  annual  number  of  miners  killed 
in  the  United  States  and  Canada  at  2.64  per  1,000.  The 
number  of  men  killed  per  100,000  of  population  in  the  regis- 
tration states  during  the  year  ending  May  31,  1900,  was: 
in  the  professions,  61.1;  mercantile  and  trading,  46.0; 
laboring  and  servant,  220.2;  manufacture  and  mechanical 
industry,  88.4;  agriculture,  transportation,  and  other  out- 
door, I39.6.-16 

It  is  probably  generally  supposed  that  agricultural  in- 
dustry is  comparatively  free  from  accidents;  but  this  does 
not  seem  to  be  true.  The  figures  we  have  for  America  agree 
with  those  which  have  been  collected  in  Europe.  The  num- 
ber of  deaths  of  men  (between  fifteen  and  forty-four  years 
of  age),  according  to  the  Twelfth  Census,  was  in  cities 

15  North  American  Review,  November,  1906,  pp.  1030  ff. ;  Social  Ser- 
vice, August,  1906. 

"Bailey,  Modern  Social  Conditions,  pp.  247-97,  253. 


INDUSTRIAL  INSURANCE 


122.4  Per  100,000  population,  and  in  the  rural  population 

I22.I. 

The  mortality  from  accidents  in  specified  occupations, 
according  to  English  experience,  1890-92,  is  shown  by  Mr. 
F.  L.  Hoffman  in  this  table  (rate  per  1,000  at  each  age).17 

TABLE  II 


General 

Unhealth- 

Ages 

Profes- 
sional 

Agricul- 
tural 

Trades 
and  In- 

Unhealth- 
f  ul  Trades 

Dangerous 
Trades 

ful  and 
Dangerous 

Common 
Labor 

dustries 

Trades 

is-^  

O.I 

0-3 

0-3 

0-3 

1.4 

1.6 

0.4 

20—24  

O.  2 

O.  1 

O.  3 

o.  3 

1.6 

1.6 

0.6 

2C—  T.A. 

O    2 

o  ^ 

O   4 

O   4. 

I   6 

i  8 

o  8 

35-44  

°-3 

o-5 

o-5 

0.6 

I.9 

2.  I 

1.  1 

45-54  

°-3 

0.6 

0.8 

0.8 

2-3 

2.8 

J-5 

c  e—  64   . 

o  6 

I    O 

i  i 

i  i 

•7  .O 

3.  2 

2.  O 

65  and  over 

I.O 

1.6 

1.9 

2.  2 

3-9 

4.1 

3-4 

4.  Influence  of  individualistic  optimism  on  the  progress 
of  social  policies  in  the  United  States.  Confidence  in  the 
ability  of  each  man  to  care  for  himself  has  grown  out  of 
the  facts  of  those  early  economic  conditions  when  the  hunter 
defended  himself  Indian  fashion  against  Indians,  and  earned 
his  livelihood  on  his  own  farm.  In  one  generation  a  nation 
has  passed  through  all  stages  of  industrial  development, 
from  hunting  and  household  production  for  household  use  to 
leadership  in  collective  production  by  huge  combinations 
for  a  world-market.  Sentiments,  in  the  form  of  prejudices, 
survive  the  situation  which  produced  them,  men  carry  the 
ideas  of  the  isolated  farm  into  the  congregate  life  of  cities 
where  they  are  out  of  place,  and  fathers  teach  to  sons  the 
philosophy  of  Poor  Richard's  Almanac  in  an  environment 
where  it  requires  enlargement  to  explain  and  fit  the  facts. 
Until  very  recently  it  was  the  common  belief,  for  which 
there  was  much  evidence,  that  any  industrious,  sober,  and 
thrifty  wage-worker  could  become  an  independent  manager 

17  Annals  of  American  Academy,  May,  1906,  p.  28. 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         57 

of  business;  and  this  cheerful  faith  endures  millions  of 
disappointments. 

Leadership  is  still  largely  in  the  hands  of  vigorous  men 
who  climbed  to  places  of  power  under  the  spur  of  this  faith 
in  individual  effort,  and  who,  spite  of  the  revolution  in 
methods  of  conducting  affairs,  preach  the  same  doctrine  to 
thousands  of  wage-workers  whom  they  control  as  with  a 
rod  of  iron.  The  unconscious  assumption  of  our  captains 
of  industry  is  that  intervention  of  government  is  necessarily 
evil — unless  they  happen  to  be  in  a  council  asking  a  fran- 
chise, or  in  a  lobby  asking  for  a  protective  tariff  for  some 
infant  industry.  The  managing  class,  mindful  of  the  suc- 
cess of  their  splendid  confidence  in  their  own  power  to 
master  difficulties,  sincerely  believe  that  wage-workers  have 
no  need  of  social  care.  They  have  been  encouraged  in  this 
creed  by  the  economic  and  political  instruction  which  had 
its  root  in  the  revolutionary  effort  to  cast  off  mediaeval 
restrictions.  According  to  this  theory,  the  state  has  one 
task — that  of  preserving  order  and  property,  while  compe- 
tition is  left  to  work  out  all  the  advantages  which  they 
expect  from  it.  "The  best  government  is  that  which  gov- 
erns least,"  has  been  a  popular  proverb. 

It  is  true  that  the  logic  is  forgotten  when  a  railroad  com- 
'pany  asks  from  government  half  the  land  along  its  right-of- 
way,  and  a  large  cash  bonus  to  reward  its  enterprise  and 
make  dividends  secure;  or  when  a  city  council  has  special 
privileges  to  barter.  They  return  to  the  inherited  theory 
when  rates  are  to  be  regulated,  workmen  are  to  be  protected, 
or  lives  of  citizens  to  be  safeguarded.  The  stinging  epithets 
of  "socialist"  or  "paternalist"  are  apt  to  be  flung  at  anyone 
who  suggests  that  the  nation  which  demands  of  its  work- 
men both  taxes  for  support,  and  in  war  lives  for  its  defense, 
ought  to  act  in  return  so  that  its  wise  paternalism  shall 


58  INDUSTRIAL  INSURANCE 

evoke  patriotism.18  When  one  seeks  to  gather  from  the 
experience  of  older  countries  lessons  to  guide  our  own 
action  as  we  move  onward  rapidly  to  the  economic  condition 
of  ancient  states,  we  are  told  that  we  of  a  free  republic 
cannot  copy  the  methods  of  "absolutism,"  cannot  submit 
to  the  "tyranny"  of  a  country  like  Germany.  Progress  is 
often  halted  for  a  time  by  such  catchwords  which  betray 
provincialism  of  thought. 

Distrust  of  governmental  interference  is  fostered  by 
defects  in  our  political  organization  and  conduct  familiar 
to  all,  and  these  are  largely  due  to  the  fact  that  the  hope  of 
prizes  in  the  world  of  management  has  drained  off  much  of 
the  best  talent  to  business  and  away  from  direct  public  serv- 
ice of  the  community.  It  is  not  too  much  to  say  that  the 
average  successful  business  man  has  an  ill-concealed  con- 
tempt both  for  the  ability  and  for  the  integrity  of  men  who 
direct  politics.  There  has  been  so  much  inefficiency  and  cor- 
ruption under  the  spoils  system  that  only  too  much  reason 
exists  for  this  widespread  distrust  of  competent  men  for 
those  in  charge  of  municipal  and  national  administration. 
Some  of  the  leaders  of  business  have  only  too  intimate 
knowledge  of  the  ways  in  which  representatives  of  the 
people  can  be  purchased  to  have  respect  for  politicians  as  a 
class,  for  they  have  themselves  made  the  deals.  This  dis- 
trust has  been  deeper  and  wider  than  was  deserved ;  for,  in 
fact,  the  administration  of  many  public  works  has  been,  on 
the  whole,  successful  and  a  part  of  the  national  glory. 
Where  the  public  administration  has  failed  it  might  have 
succeeded  better  if  business  men  had  not  been  so  absorbed 
in  making  themselves  rich.  Failure  of  government  is  no 
credit  to  them. 

5.  The  absence  of  a  national  legislative  power  and  of 
either  national  or  state  administrative  organs  adapted  to 

18  What  is  patriotism  but  love  for  "fatherland"? 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         59 

insurance  has  tended  to  retard  progress  in  the  social  protec- 
tion of  workingmen.  Congress  is  limited  by  the  Constitu- 
tion to  interstate  commerce,  to  the  District  of  Columbia  and 
the  territories,  as  a  field  of  legislation  and  control.  Many 
of  the  industries  can  be  touched  only  by  state  laws.  In  the 
states  until  recently  a  central  administrative  organization 
has  been  almost  entirely  wanting.  In  Germany  there  has 
long  been  a  central  administration  with  great  power,  and  in 
France  the  nation  is  accustomed  to  give  to  the  regulations 
of  administrative  councils  all  the  force  of  law.  The  develop- 
ment of  the  Home  Office  in  Great  Britain  enables  the  legis- 
lator there  to  enforce  laws  which  here  would  require  the 
creation  of  new  agencies  or  the  very  great  increase  of 
functions  of  existing  organs.  The  independence  of  each 
state  is  an  obstacle  in  the  way  of  passing  laws  which  involve 
expense  in  the  management  of  business,  since  the  manu- 
facturers and  traders  of  each  state  are  in  competition  with 
those  of  all  other  states.  These  are  some  of  the  difficulties 
which  must  be  overcome  in  the  process  of  securing  for 
workingmen  the  protection  and  insurance  which  have  come 
to  be  regarded  as  just  in  all  other  advanced  nations.  A  bill 
brought  before  the  Legislature  of  Massachusetts  in  1904  to 
introduce  the  British  Compensation  Act  of  1897  was  de- 
feated by  the  claim  of  the  manufacturers  that  the  indemnities 
required  of  them  would  cripple  them  in  competing  with 
manufacturers  of  other  states.  The  same  argument  could 
be  used  in  all  other  states,  and  we  should  have  a  deadlock, 
if  the  argument  were  sound. 

6.  In  order  to  escape  from  this  whirlpool  in  which  our 
political  system  seems  to  hold  us,  it  must  be  shown  that  the 
social  policy  of  protection,  education,  and  insurance,  so  far 
from  being  a  financial  burden  on  the  manufacturers  of  a 
state,  is  a  paying  investment;  that  the  best  investment  of  a 
business  community  is  not  in  machines  of  steel  and  wood, 


60  INDUSTRIAL  INSURANCE 

but  in  its  productive  human  agents ;  and  that  the  state  which 
first  commits  itself  honestly  to  this  policy  and  works  it  out 
wisely  will  take  and  keep  the  lead  in  business,  by  attracting 
and  holding  an  army  of  healthy,  sober,  conservative,  rela- 
tively contented  and  faithful  workmen.  This  is  no  place  to 
do  more  than  suggest  the  outline  of  an  argument  in  favor 
of  this  proposition.  It  rests  on  the  fact  that  the  condition 
of  bodily  vigor,  of  comparative  contentment  and  serenity 
of  mind,  of  freedom  from  irritating  and  depressing  despair 
in  prospect  of  incapacity  to  earn  a  living  temporarily  or 
permanently,  is  an  asset  of  first  importance  in  the  process 
of  continuous  manufacture.  The  workman  who  has  suit- 
able conditions  of  human  existence  is  for  that  industrially 
more  efficient,  is  a  better  customer  with  larger  and  more 
steady  purchasing  power,  loses  less  time  by  drunkenness  and 
vice,  has  more  varied  wants,  and  demands  more  kinds,  finer 
grades,  and  larger  quantities  of  commodities.  The  state 
whose  industries  take  best  care  of  its  men  will  swiftly  and 
surely  attract  and  hold  the  best  workmen.  It  is  the  fashion 
in  some  quarters  to  undervalue  this  argument,  and  to  ascribe 
all  virtue  to  improved  machinery  and  shop  organization 
and  modes  of  paying  wages;  but,  after  all,  the  experience 
of  a  century  is  worth  more  than  the  passing  passion  of  a 
man  sore  after  a  strike,  and  common-sense  will  surely  come 
to  the  help  of  morality  and  decide  that,  on  the  whole,  human 
workers,  with  sound  bodies  and  varied  wants,  are  at  once 
our  first  factor  in  large  production  and  our  largest  market 
for  goods  made.  A  million  such  civilized  customers  are 
better  than  several  millions  of  naked  savages  or  all  the 
spendthrifts  in  the  world. 

It  is  a  pleasure  to  quote  the  testimony  of  a  man  in  the 
highest  position  in  finance,  that  workingmen's  insurance 
"has  become  one  of  the  leading  factors  in  helping  Germany 


SOCIAL  POLICY  OF  INDUSTRIAL  INSURANCE         61 

to  the  industrial  pre-eminence  which  she'  is  gaining."19     In 
speaking  of  the  sickness  insurance  of  Germany  he  says : 

The  testimony  in  regard  to  the  value  of  the  work  done  in  the  sick 
insurance  system  is  almost  universally  favorable.  It  would  be  hard 
to  calculate  its  economic  importance,  but  it  is  so  great  that  it  has 
become  one  of  the  leading  factors  in  helping  Germany  to  the  industrial 
pre-eminence  which  she  is  gaining. 

7.  The  attitude  of  the  trade-unions  to  obligatory  insur- 
ance, the  only  kind  which  can  ever  afford  help  to  all  and 
especially  to  those  who  most  require  it,  is  still  in  doubt. 
The  national  assembly  of  the  American  Federation  has  voted 
down  a  resolution  favoring  such  insurance  in  the  form 
presented  to  it.20  But  the  probability  is  that  under  its  more 
recent  forms,  when  once  clearly  explained  to  the  members 
and  properly  presented,  it  will  soon  win  their  favor.  Obliga- 
tory workingmen's  insurance  has  been  in  the  past  in  this 
country  connected  with  attempts  to  compel  the  workmen  to 
pay  an  excessive  share  of  the  premiums,  to  break  the  power 
of  the  union  and  alienate  its  members,  and  to  retain  the 
equitable  share  of  the  funds  to  which  the  men  have  contrib- 
uted if  they  leave  the  service  or  are  discharged.  In  conven- 
tions the  propositions  for  collective  insurance  have  been 
championed  by  the  socialist  faction  and  have  gone  down  in 
the  defeat  of  this  party.  Insurance  in  the  European  sense  has 
never  yet  been  offered  to  our  workmen  in  any  state.  When 
it  is  shown  that  obligatory  insurance  does  not  mean  absolute 
control  of  employers,  but  union  of  effort  in  which  both 
sides  are  fairly  represented  in  local  management;  that  the 
interest  in  collective  bargaining  remains  untouched;  that 

u  Mr.  F.  A.  Vanderlip,  in  North  American  Review,  December,  1905, 
p.  925- 

"The  federal  Bureau  of  Labor  is  now  engaged  in  a  thorough  investi- 
gation of  the  whole  subject,  and  a  report  is  expected  before  many  months. 
Some  results  of  the  investigation  have  already  been  published  and  are 
used  in  this  volume. 


62  INDUSTRIAL  INSURANCE 

voluntary  organizations  are  recognized  and  made  secure  by 
suitable  state  supervision  and  control  and  that  taxpayers,  so 
far  from  being  asked  to  increase  burdens,  will  be  substanr 
tially  relieved  from  many  charity  demands,  it  seems  likely 
that  indifference  and  antagonism  will  change  to  approval. 
Mr.  John  Mitchell  has  expressed  a  favorable  opinion  which 
already  has  won  the  attention  and  the  approval  of  many 
trade-unionists.21 

8.  America  has  no  system  of  industrial  insurance,  but  a 
beginning  has  been  made  from  various  starting-points — local 
societies,  trades-unions,  fraternal  societies,  employers'  initia- 
tive, private  corporations,  casualty  companies,  and  munici- 
palities. The  nation  throughout  its  history,  from  Plymouth 
pilgrims  down  to  our  own  day,  has  developed  the  most 
extensive  pension  system  known  to  the  civilized  world.  Out 
of  these  fragmentary,  contradictory,  inadequate,  unsyste- 
matic experiments  the  nation  has  yet  to  develop  a  consistent 
and  worthy  social  policy.  It  is  our  purpose  to  describe  these 
various  schemes,  and  to  inquire  what  measures  promise 
immediate  improvement  and  tend  in  the  right  direction. 
Signs  are  not  wanting  that  many  of  the  most  competent 
leaders  of  industry  and  commerce  will  in  the  near  future 
give  much  more  attention  to  this  problem  than  they  have 
hitherto  done. 

21  Report  of  Industrial  Commission,  Vol.  XII,  p*  50. 


CHAPTER  II 
LOCAL  RELIEF  SOCIETIES 

The  most  simple  and  primitive  form  of  industrial  insur- 
ance is  found  in  the  numerous  mutual  benefit  associations 
which  exist  everywhere  and  under  many  forms.  Some  of 
these  are  aided  by  the  employers  and  others  are  supported 
entirely  by  the  contributions  of  the  members.  These  mutual 
aid  associations  are  the  elementary  school  of  thrift,  of 
brotherhood,  and  of  the  future  social  policy  which  is  grow- 
ing up  within  these  voluntary  organizations.  These 
societies  rarely  have  any  centralized  organization  to  bind 
them  together,  the  state  does  not  recognize  their  existence 
until  they  become  federated  and  important,  and  their  by-laws 
have  no  direction  from  actuarial  experts.  They  spring  up 
spontaneously  and  by  imitation  in  response  to  economic 
necessity,  and  they  are  found  among  wage-earners  of  many 
occupations  and  of  many  nationalities  in  our  large  cities. 
German,  Scandinavian,  Italian,  and  Hebrew  immigrants  find 
in  their  little  societies  protection  and  support  in  the  hour  of 
sickness  and  sorrow.  The  negroes  have  similar  organiza- 
tions and  are  greatly  attached  to  them.  Reliable  statistics 
are  not  accessible,  because  there  is  no  central  office  nor 
general  system  of  reports.  The  administration  is  often 
changed  and  usually  inadequate,  while  the  bookkeeping  is 
ordinarily  very  crude  and  unsatisfactory.  It  would  be 
almost  impossible  to  reduce  their  premiums  and  benefits  to 
tabular  form,  because  each  society  has  its  own  peculiarities. 
All  that  is  here  attempted  is  to  give  a  certain  number  of 
significant  illustrations  and  to  call  attention  to  certain 
general  tendencies. 

Mutual  aid  societies  of  immigrants  from  Europe. — In 

63 


64  INDUSTRIAL  INSURANCE 

a  foreign  land  and  among  strangers  the  poorer  immigrants 
seek  fellowship,  encouragement,  and  care  among  those  who 
understand  their  language  and  sing  the  songs  of  fatherland, 
In  the  large  cities  the  people  of  the  same  race  or  nationality 
establish  societies  of  a  charitable  nature  in  order  to  succor 
their  countrymen  who  have  not  yet  won  a  secure  place  and 
means  of  self-support.  Those  who  have  lived  in  this  coun- 
try some  time  and  have  become  prosperous  are  proud  to 
relieve  the  distress  of  those  recently  arrived.  Public  relief 
and  the  alms  of  other  races  are  felt  to  be  disgraceful,  and 
soon  the  industrious  immigrants  prefer  to  aid  each  other 
through  contributions  to  a  mutual  benefit  society  where  the 
thought  of  alms  is  not  present.  For  some  time  the  benefit 
societies  retain  something  of  the  character  of  their  origin 
in  charitable  relief,  but  the  tendency  is  to  remove  them  as 
fast  as  possible  from  this  ground.  Naturally  these  inde- 
pendent new  citizens  associate  themselves  with  persons  of 
their  own  race  and  language.  This  tendency  is  fostered  by 
the  fact  that  immigrants  often  form  "colonies"  of  members 
of  the  same  nationality  and  religious  confession,  and  thus 
we  have  Bohemian  or  Italian  quarters  and  sometimes  a 
Ghetto.  Frequently  these  colonies  contain  thousands  of 
persons  who  come  from  the  same  land,  speak  the  same 
tongue,  and  worship  after  the  same  ritual.  The  Russian 
Jews  dwell  in  the  same  region  of  a  city,  the  Italians  are  for 
the  most  part  Catholics,  and  the  Bohemians  are  Catholic  or 
free-thinkers.  It  follows  very  naturally  that  many  of  these 
local  societies  are  composed  of  families  of  the  same  language 
and  religion.  The  synagogue  or  church  may  easily  become 
the  social  center  of  the  organization,  and  on  festival  oc- 
casions the  place  of  public  worship  may  witness  their 
ceremonies  and  incidentally  advertise  their  advantages. 

In  the  city  of   Philadelphia,   in  the  year    1892,   was 
founded  the  society  of  the  Independent  Chevra  Kadisho, 


LOCAL  RELIEF  SOCIETIES  65 

whose  purpose  was  to  furnish  poor  families  with  money  for 
funeral  expenses.  It  has  about  3,000  members,  each  of 
whom  pays  ten  cents  each  month  as  dues.  There  are  three 
other  societies  of  a  similar  character  in  the  city.  Mr.  Bern- 
heim  tells  us  that  the  lodges  furnish  social  recreation  and 
contribute  materially  to  the  elevation  of  the  social  condition 
of  the  residents  of  a  Ghetto.  Various  branches  of  the 
brotherhoods  extend  in  every  direction  and  there  are  few 
families  which  are  not  connected  with  some  organization. 
The  Ghetto  in  Chicago  contains  seventy-five  registered 
lodges,  of  which  thirty-two  belong  to  the  federation  B'rith 
Abraham  and  twenty  to  the  Western  Star,  and  others  to 
less  conspicuous  unions.  In  this  respect  they  resemble  the 
lodges  so  popular  among  their  Christian  neighbors  which 
furnish  life  insurance  to  their  members  and  so  render  an 
important  economic  service  which  is  the  principal  ground 
for  their  existence.  Here  we  see  a  common  tendency  to 
federate  local  lodges  into  larger  societies  or  brotherhoods, 
a  form  of  union  which  will  be  studied  more  closely  in  the 
chapter  which  will  follow  later  on  "Fraternal  Benefit 
Societies." 

Mutual  benefit  societies  in  mercantile  and  manufacturing 
establishments. — Common  employment  in  the  same  house 
furnishes  a  canvenient  basis  for  organization  of  a  mutual 
benefit  society  in  a  simple  and  imperfect  form.  Here  again 
the  mutual  benefit  fund  is  established  to  avoid  dependence 
on  charitable  appeals.  Wherever  people  come  together  in 
considerable  numbers  and  with  moderate  and  small  incomes, 
a  prolonged  illness,  a  serious  accident  and  the  extraordinary 
demands  of  a  funeral  inevitably  start  someone  to  collect 
money  to  meet  the  emergency.  This  instinctive  appeal  to 
humanity  is  enforced  by  the  reflection  that  no  one  knows 
who  may  require  assistance  next.  The  employer  is  usually 
asked  to  contribute  to  this  fund.  But  the  whole  arrange- 


66  INDUSTRIAL  INSURANCE 

ment  is  unsatisfactory.  The  liberal  pay  relatively  much,  the 
stingy  shirk  duty,  yet  will  sometimes  make  heavy  demands 
when  trouble  strikes  them,  while  the  vicious  or  thriftless 
make  special  burdens  for  others.  It  is  found  that  a  regular 
payment  provides  a  fund,  even  if  a  small  one,  that  it  lasts 
longer  than  spasmodic  charity,  that  it  distributes  the  burden 
more  fairly,  and  that  no  one  feels  himself  disgraced  by 
taking  his  share  when  it  becomes  necessary.  Without  at- 
tempting any  classification  a  few  examples  will  illustrate  the 
variety  of  methods  and  the  general  tendencies  of  this  type 
of  mutual  benefit  associations. 

The  Employees'  Mutual  Benefit  Association  of  the 
department  store  of  Carson,  Pirie,  Scott  &  Co.,  Chicago,  is 
a  specimen  of  this  group.  This  association  was  founded  in 
the  year  1895.  All  employees  of  the  firm  are  eligible  for 
membership.  The  officers  are  elected  by  the  members,  and 
the  element  of  self-government  is  strong.  The  members 
are  divided  into  two  classes:  (i)  Class  A,  composed  of 
those  who  receive  more  than  $5  weekly  wages ;  (2)  Class  B, 
those  who  receive  $5  or  less.  The  initiation  fees  are  $i  and 
50  cents,  the  monthly  dues  are  35  cents  and  15  cents,  which 
are  collected  by  the  simple  process  of  deducting  the  dues 
from  payments  of  wages.  The  sick  benefits  are  $6  or  $3, 
according  to  the  class,  paid  during  6  weeks  after  the  first 
week.  The  death  benefits  are  $100  or  $50,  paid  out  of  a 
fund  raised  by  assessments  of  25  and  15  cents  on  the  occa- 
sion of  a  death.  In  a  report  of  January  i,  1906,  it  is  said 
that  there  were  790  members,  an  increase  from  525  of  the 
year  before.  On  April  18,  1906,  there  were  1,056  members, 
indicating  a  rapid  growth.  During  the  year  1905  the 
expenditures  for  sick  benefits  were  $3,194;  funeral  expenses, 
$100;  medical  attendance,  $142.50;  costs  of  administration, 
$75.50;  charitable  relief,  $25.  Of  the  members  394  partici- 
pated in  benefits  during  1905.  The  entire  expenditures 


LOCAL  RELIEF  SOCIETIES  67 

since  the  establishment  of  the  fund  had  been  $20,870.37. 
Membership  is  voluntary.  Significant  is  the  opinion  of  the 
administrator  of  this  fund  based  on  his  observation  of  its 
value  and  limitations.  He  has  reached  the  judgment  that 
the  success  of  the  fund  proves  that  it  is  desirable  to  secure 
sickness  insurance  at  low  cost.  In  order  to  be  successful 
a  benefit  society  must  meet  all  claims  promptly  after  careful 
investigation.  What  is  good  for  a  few  must  be  good  for 
all  wage-earners,  and  therefore  he  recommends  that  the 
state  levy  a  small  tax  on  all  employers  according  to  the  num- 
ber of  their  employees.  The  premiums  should  be  fixed  by  a 
competent  actuary  according  to  the  rates  of  wages  paid. 
From  this  tax  a  fund  would  furnish  safer  and  cheaper 
sickness  and  invalidity  insurance  and  death  benefits  than 
could  be  furnished  by  fraternal  organizations.  Branch 
societies  could  be  organized  and  administered  by  unsalaried 
officers  in  each  store  and  factory,  and  in  each  office  the 
premiums  could  be  collected  and  the  benefits  paid  out.  In 
case  of  change  of  employment  the  employee  could  be  trans- 
ferred to  the  society  of  the  place  to  which  he  goes.  The 
only  condition  of  membership  would  be  employment  in  some 
particular  enterprise.  One  consequence  of  this  arrange- 
ment would  be  that  an  employee  would  rarely  desert  his 
position  without  good  reason  and  thus  lose  his  claims  by  a 
strike  or  unworthy  conduct.  Many  employers  already 
expend  considerable  sums  for  charity  and  for  protection 
against  strikes  which  might  much  more  profitably  be  paid 
out  in  insurance.  The  state  as  well  as  employers  would  de- 
rive advantage  from  this  organization  because  the  tendency 
would  be  to  diminish  the  causes  of  social  disturbance.  This 
opinion  is  given  at  this  point  as  an  indication  of  the  influence 
of  practical  administration  of  such  funds  on  a  business 
man.  Criticism  is  reserved  for  a  suitable  place. 

The   Siegel-Cooper   Company   Employees'   Association 


68  INDUSTRIAL   INSURANCE 

was  organized  in  Chicago  in  1893,  and  later  an  association 
was  formed  among  the  employees  of  the  house  of  this  firm 
in  New  York.  Only  employees  of  the  firm  can  become 
members  of  the  society.  The  members  are  divided  into 
four  classes  according  to  their  rates  of  wages ;  and  the  con- 
tributions are  scaled  in  the  same  way:  wages  per  week, 
$2.50  or  less,  10  cents  monthly  dues;  wages  $2.50  to  $5, 
20  cents;  wages  $5.01  to  $9.99,  30  cents;  wages  $10  and 
over,  40  cents  monthly.  When  the  fund  falls  below  $500 
an  assessment  of  25  cents  per  member  is  levied  to  provide 
means.  The  benefits  received  are  free  medical  care  and  $5 
weekly  sick  benefits  during  six  weeks  for  those  whose  wages 
are  over  $10  weekly  and  half  wages  for  the  others.  In  cases 
of  chronic  disease  no  benefits  are  paid.  In  exceptional  cases 
a  gratuity  of  not  more  than  $50  is  paid  to  needy  members 
who  are  sick.  Death  benefits  of  $100  in  the  higher  classes 
and  $50  in  the  two  lower  classes  are  paid,  but  lower  sums 
in  case  dues  have  not  been  paid  a  full  year. 

The  Mutual  Aid  Association  of  employees  of  J.  H. 
Williams  &  Co.,  Brooklyn,  New  York,  was  formed  in  1901. 
The  members,  who  are  employees  of  the  firm,  are  divided 
into  two  classes  according  as  their  wages  are  above  or  below 
$12  weekly,  and  the  weekly  dues  are  20  and  10  cents.  The 
benefits  paid  are  $11  weekly  in  the  first  class  and  $6  in  the 
second  class.  During  the  first  week  of  inability  to  work 
nothing  is  paid.  The  member  must  pay  dues  six  weeks 
before  he  can  receive  benefits.  During  six  weeks  the  per- 
son disabled  receives  the  full  benefit  and  if  the  sickness 
continues  the  rate  is  reduced  to  one-half  and  paid  for 
twenty  weeks.  The  total  amount  which  one  member  can 
receive  is  limited  to  $176  in  the  first  class  and  to  $96  in  the 
second  class.  A  member  who  leaves  the  employment  of  the 
firm  after  he  has  paid  dues  for  a  full  year  without  having 
drawn  upon  the  fund  receives  back  one-half  of  the  sum  he 


LOCAL  RELIEF  SOCIETIES  69 

has  contributed  to  the  fund.  The  family  of  a  member  who 
dies  after  having  paid  dues  six  months  receives  $50  death 
benefit,  and  if  he  has  been  a  member  one  year  the  family  is 
paid  $100.  In  case  of  the  funeral  of  a  member  $5  may  be 
expended  for  flowers,  but  no  other  gratuities  are  permitted. 

The  Sherwin-Williams  Employees'  Mutual  Benefit 
Society  admits  only  employees  of  the  firm,  and  membership 
is  voluntary.'  The  members  agree  to  permit  the  paymaster 
of  the  firm  to  deduct  from  the  weekly  wages  one  cent  from 
each  dollar  due  where  the  wages  are  under  $10.  The  bene- 
fits cannot  exceed  one-half  the  wages  of  $10,  and  none  are 
paid  during  the  first  week  of  absence  from  work.  Where 
the  disability  is  caused  by  vice  or  drunkenness  no  sick  benefit 
is  paid.  The  death  benefit  is  $25. 

The  Mutual  Benefit  Association  of  the  Cleveland  Hard- 
ware Co.,  according  to  the  by-laws  of  1901,  has  two  classes 
of  members,  "Seniors,"  who  are  over  nineteen  years  of 
age,  and  "Juniors,"  who  are  under  nineteen  years.  The 
weekly  dues  are  25  and  I2j^  cents,  according  to  the  class. 
The  senior  members  receive  in  sickness  $6  for  two  weeks, 
$5  during  twelve  weeks,  $2.50  per  week  for  the  next 
thirteen  weeks,  and  $i  per  month  during  the  remainder  of 
the  illness.  The  period  of  payment  of  benefit  is  limited  to 
twenty-six  successive  weeks  in  any  one  year.  The  Junior 
members  receive  half  as  much  as  the  Seniors.  At  the 
death  of  a  member  an  assessment  of  50  or  25  cents,  accord- 
ing to  class,  is  levied.  Drunkenness  and  immorality  exclude 
the  sick  member  from  participation  in  the  benefits.  This 
is  an  almost  universal  rule  in  such  associations.  It  is  a  rule 
which  may  be  necessary,  but  it  must  be  examined  critically 
as  to  its  justice,  for  it  does  not  seem  fair  to  accept  the  dues 
for  a  long  time  and  then  refuse  to  pay  benefits.  It  would 
seem  that  at  least  part  of  the  contributions  should  be  re- 
turned to  such  persons.  The  German  insurance  law  formerly 


70  INDUSTRIAL  INSURANCE 

contained  this  rule,  but  it  has  been  changed.  No  person 
needs  more  medical  care,  even  in  the  public  interest,  than 
one  afflicted  with  a  contagious  disease,  no  matter  how  it  has 
been  caused.  The  necessity  for  the  rule  reveals  a  radical 
and  incurable  defect  in  all  merely  local  insurance  funds. 

The  Brown  &  Sharp  Mutual  Relief  Association,  Provi- 
dence, Rhode  Island,  was  organized  September  10.  1886. 
The  officers,  chosen  by  the  members,  are  president,  vice- 
president,  secretary,  treasurer,  and  directors.  The  president 
appoints  visiting  committees  who  visit  the  sick  in  order  to 
manifest  fraternal  interest  and,  incidentally,  to  prevent 
fraud  of  malingerers.  Membership  is  open  only  to  em- 
ployees of  the  firm.  Members  of  the  first  class,  receiving 
over  $8  weekly  wages,  pay  5  cents  weekly  dues,  and  mem- 
bers of  the  second  class,  receiving  less  than  $8  per  week, 
pay  2j£  cents  weekly  dues.  The  dues  are  collected  monthly 
by  the  secretary.  In  order  to  cover  unusual  drafts  on  the 
funds  an  assessment  of  50  cents  in  the  first  class  and  25 
cents  in  the  second  class  may  be  levied  by  the  directors,  but 
not  more  than  twice  in  any  one  year.  Higher  assessments 
can  be  laid  only  by  a  two-thirds  vote  of  the  members.  The 
sick  benefits  are  $i  and  50  cents  daily,  according  to  class, 
paid  during  thirteen  weeks,  Sundays  not  included.  A  per- 
son must  pay  dues  four  weeks  before  he  is  entitled  to  receive 
benefits.  Immoral  conduct  excludes  from  rights  to  benefits. 

The  Clerks'  Benefit  Society  of  Montgomery  Ward  & 
Co.,  Chicago,  receives  a  small  contribution  from  the  firm. 
Membership  is  voluntary  and  there  are  between  four  hun- 
dred and  five  hundred  members.  A  reserve  fund  of  $1,000 
to  $3,000  is  kept.  Members  of  class  A  are  employees  of  the 
male  sex  over  eighteen  years  of  age.  and  female  employees 
who  are  accepted  by  the  board  of  directors;  members  of 
class  B  are  male  employees  under  eighteen  years  of  age  and 
female  employees  not  eligible  for  class  A.  The  entrance 


LOCAL  RELIEF  SOCIETIES  71 

fee  is  $i  and  the  monthly  dues  are  50  and  25  cents.  The 
weekly  sick  benefit  is  $10  or  $5,  and  is  paid  for  thirteen 
weeks  beginning  with  the  fourth  day  of  absence  from  work; 
but  benefits  may  not  exceed  the  wages.  When  a  member 
of  class  A  dies,  each  member  of  this  class  pays  an  assess- 
ment of  $i,  and  each  member  of  class  B  pays  50  cents;  and 
when  a  member  of  class  B  dies,  each  member  of  class  A 
pays  50  cents  and  each  member  of  class  B  pays  25  cents  to 
pay  death  benefit.  The  secretary  receives  $50  yearly  for  his 
services. 

The  Seroco  Mutual  Benefit  Association  (employees  of 
Sears,  Roebuck  &  Co.,  Chicago).  The  employees  are 
divided  into  two  classes:  class  A  consisting  of  those  who 
receive  weekly  wages  of  $9  or  more  and  class  B,  those  whose 
weekly  wages  are  under  $9.  The  monthly  dues  are  graded 
according  to  the  wages,  10,  20,  30,  40,  50,  or  60  cents.  The 
assessment  to  provide  benefit  on  the  occasion  of  a  death  is 
the  amount  of  dues  for  one  month.  Membership  is  volun- 
tary. Sick  benefits  are  paid  according  to  the  wage  group, 
after  three  days  for  eight  weeks : 

TABLE  I 


Weekly  Wages 

Weekly  Sick  Benefit 

Death  Benefit 

Under  $4.  . 

$    2 

S    2- 

$  4-$  6  

CQ 

6-  o.  . 

6 

7«r 

O—    12 

8 

ZOO 

12—    1C. 

10 

I2C. 

15  and  above 

12 

*-*3 

I  en 

*3** 

The  administration  is  conducted  by  a  president  and  the 
other  customary  officers  and  five  directors  who  must  be 
foremen  of  the  firm.  The  president  of  the  society  sends  a 
circular  letter  to  each  new  employee  and  advises  him  to 
become  a  member  of  the  society  and  describes  the  advantages 
it  offers.  From  one  of  these  circulars  we  may  learn  some- 
thing of  the  motives  of  the  organization: 


72  INDUSTRIAL  INSURANCE 

In  nearly  all  large  institutions  where  many  people  are  employed, 
and  who  become  closely  allied  with  each  other  in  the  daily  routine  of 
their  work,  it  is  customary  when  a  co-worker  has  the  misfortune  to 
become  incapacitated  for  work  to  render  him  such  financial  aid  as  is 
possible  by  "passing  the  hat"  or  raising  money  by  subscription.  To 
overcome  such  conditions  in  our  house  the  Seroco  Mutual  Benefit  Asso- 
ciation was  organized  on  June  I,  1902.  A  member  is  not  a  subject  of 
charity,  as  he  pays  for  what  he  receives.  ....  From  the  standpoint 
of  insurance,  the  rates  are  much  lower  than  similar  insurance  can  be 
procured  from  any  regular  insurance  company;  furthermore,  there  is 
no  company  that  will  issue  a  policy  covering  all  the  conditions  at  such 
a  small  cost  as  the  S.  M.  B.  A.  offers,  and  our  society,  being  con- 
ducted virtually  without  expense,  makes  it  possible  to  give  its  members 
such  liberal  terms. 

The  application  for  membership  includes  a  statement 
which  is  intended  to  show  what  physical  infirmities  affect 
the  health  of  the  applicant  and  to  exclude  those  who  suffer 
from  rheumatism,  cancer,  heart  disease,  insanity,  consump- 
tion, paralysis,  or  apoplexy.  The  association  is  virtually 
self-supporting  and  not  dependent  on  contributions  from 
the  firm.  Since  May,  1905,  no  initiation  fee  has  been  re- 
quired. The  firm  supplies  free  printing  and  stationer}-,  free 
services  of  the  visiting  nurses  from  the  hospital  department, 
and  medical  attendance  of  the  physicians  in  sen-ice  of  the 
company.  Higher  officials  pay  dues  but  do  not  receive  bene- 
fits from  the  fund,  since  their  salaries  are  continued  during 
illness.  The  manager  of  the  society  says  that  his  experience 
has  taught  him  that  "the  laboring  classes  are  not  quick  to 
discern  what  is  undoubtedly  a  great  benefit  to  them." 
Since  membership  is  voluntary,  only  2,610  out  of  7.500 
employees  have  become  members.  It  is  suggested  that  many 
of  them  prefer  to  insure  themselves  in  regular  insurance 
companies  and  with  fraternities  to  which  they  have  social 
attachments.  The  manager  says  that  at  the  time  of  writing 
the  expenditures  were  in  excess  of  receipts,  and  they  were 
considering  more  stringent  rules  for  the  exclusion  of  per- 


LOCAL  RELIEF  SOCIETIES 


73 


sons  affected  by  rheumatism  and  tuberculosis.  The  manager 
admits  the  desirability  of  insurance  which  has  the  generality, 
safety,  and  adequacy  of  the  German  methods  of  private 
insurance  associations  organized  under  state  laws,  which  at 
once  make  insurance  obligatory  on  all  and  provide  means 
for  meeting  the  obligations.  But  he,  like  most  American 
business  men,  with  the  instinctive  feeling  that  government 
is  a  necessary  evil,  shrinks  from  state  "compulsion,"  al- 
though he  clearly  sees  that  nothing  short  of  state  require- 
ment will  ever  guarantee  needed  protection  to  all  wage- 
earners.  It  is  the  attitude  of  the  typical  American.  The 
results  of  this  association  are  indicated  in  the  report: 

TABLE  n 


Yc3.w  Hndinz 

Pi;.—  ez:~ 

Expenditures 

Membership 

May  i,  IQO*  . 

$?,4Oi4.l8 

$  2,23O.Q3 

O72 

May  i   1004. 

<,2OO.7O 

1.747  -  05 

I.I" 

May  i,  IQOS  . 

c  ,040.80 

4,137.00 

I.-^C 

May  i,  1006  

8,486.80 

6,360.0? 

2.2-^ 

Total 

$23  O4I    48 

$16  48*  83 

These  figures  indicate  a  steady  growth  and  considerable 
satisfaction  with  the  administration ;  perhaps  some  pressure 
from  the  firm. 

The  Solvay  Mutual  Benefit  Society,  Geddes,  New  York, 
was  organized  in  1888,  and  the  by-laws  were  revised  in 
1905.  The  members  elect  twelve  trustees,  and  these  choose 
the  president  and  vice-president.  The  treasurer  and  physi- 
cian are  appointed  by  the  firm  and  are  paid  by  the  society. 
The  society  is  not  responsible  for  the  payment  of  the 
sen-ices  of  physicians  other  than  their  own.  The  members 
must  pass  a  medical  examination  before  being  admitted  and 
only  employees  of  the  firm  are  eligible  for  membership. 
The  admission  fee  is  90  cents  and  the  monthly  dues  30  cents. 
The  employees  who  earn  less  than  $5  weekly  wages  pay  half 


74  INDUSTRIAL  INSURANCE 

the  rate  and  receive  half  the  ordinary  benefits.  The  dues 
and  fees  are  collected  by  the  cashier  of  the  firm  who  retains 
the  amount  from  the  pay-roll  in  accordance  with  a  previous 
agreement.  A  new  member  does  not  receive  sick  or  accident 
benefits  until  he  has  paid  dues  90  days.  Members  who  receive 
over  $5  weekly  have  during  illness  or  disability  to  work  on 
account  of  accident  $6  weekly;  others  receive  only  half  as 
much,  and  the  period  of  payment  of  benefits  is  twenty-six 
weeks.  There  is  no  further  protection,  and  nothing  is  paid 
in  benefits  during  the  first  week  of  disability.  A  member 
sick  with  smallpox  is  attended  by  a  physician  not  connected 
with  the  society  and  during  his  disability  is  paid  his  sick 
benefit.  If  a  member  is  placed  in  quarantine  he  is  paid  his 
benefit,  but  may  not  permit  visits  in  his  house.  A  member 
affected  by  venereal  disorders  or  who  is  a  drunkard  is 
excluded  from  the  benefits.  The  firm  makes  no  direct  con- 
tribution to  the  fund.  The  death  benefit  paid  to  the  family 
is  $100;  the  husband  being  paid  $50  for  funeral  expenses  in 
case  of  the  death  of  his  wife.  Benefits  cease  after  twenty- 
six  weeks.  The  nurse  is  paid  by  the  society  $i  each  night 
of  service.  Extra  assessments  may  be  levied  on  members 
by  the  vote  of  two-thirds  of  the  trustees. 

The  Estey  Organ  Co.  Benefit  Association,  Brattleboro, 
Vermont,  was  organized  in  1902.  The  ordinary  yearly  dues 
are  $i  and  an  assessment  of  $i  may  be  levied.  The  firm  con- 
tributes to  the  fund  20  per  cent,  of  the  payments  made  by 
the  members.  The  executive  committee  has  three  members 
of  whom  two  are  chosen  by  the  employees  and  one  by  the 
firm.  A  sick  benefit  of  $i  daily  is  paid  during  ten  weeks, 
Sundays  excepted.  A  death  benefit  of  $60  is  paid  to  the 
family  of  a  deceased  member. 

Allis  Mutual  Aid  Society,  Milwaukee,  Wisconsin.  In 
the  introduction  to  the  by-laws  we  find  an  explanation  which 
is  applicable  to  all  organizations  of  this  kind  which  are 


LOCAL  RELIEF  SOCIETIES  75 

efforts  to  escape  from  charity  methods.  The  founders  of 
this  society  had  for  their  purpose  to  furnish  aid  in  time  of 
need  without  carrying  around  a  begging  list,  and  to  give 
help  on  the  basis  of  a  business  contract.  The  initiation  fee 
is  50  cents,  the  monthly  dues  25  cents,  and  extra  assess- 
ments may  be  levied.  Sick  benefit,  after  the  first  week  of 
illness,  is  75  cents  daily  up  to  90  days,  and  gratuitous 
medical  attendance  is  furnished.  The  death  benefit  is  $100. 
In  the  report  for  April  15,  1901,  it  was  shown  that  $4,- 
204.75  nad  been  received  from  members,  $3,993-93  from 
the  firm,  and  that  $9,026.56  had  been  expended. 

The  Deering  Workmen  Mutual  Benefit  Association,  Chi- 
cago, required  an  entrance  fee  of  50  cents,  fortnightly  dues 
of  15  cents,  and  a  yearly  payment  of  10  cents  for  adminis- 
tration; and  also  an  assessment  of  10  cents  on  the  occasion 
of  a  death  or  when  the  fund  falls  below  $150.  A  sick 
benefit  of  $5  after  the  first  week  during  eight  weeks  is  paid, 
or  longer  by  special  vote  of  the  trustees.  The  death  benefit 
is  $50. 

The  Natural  Food  Co.  Relief  Association,  Niagara 
Falls,  New  York,  collects  weekly  dues  of  5  and  2j^  cents 
according  to  wage  rate,  over  or  under  $6.50  per  week;  and 
the  collection  is  made  by  deducting  the  dues  from  the  fort- 
nightly wage  payments.  The  firm  contributed  as  much  as 
the  members  until  the  fund  reached  $1,000.  An  assessment 
of  50  or  25  cents  may  be  levied  according  to  wage  class. 
The  entrance  fee  is  50  cents.  The  sick  benefit  is  a  daily 
payment  of  $i  or  50  cents  during  twelve  weeks,  after  seven 
days,  Sundays  being  excepted.  The  death  benefit  in  the 
higher  wage  class  is  $75  and  in  the  lower  $37.50. 

The  Employees'  Aid  Association  of  the  Moline  Plow 
Co.,  Moline,  Illinois,  is  a  voluntary  organization.  Money 
is  raised  by  assessments  levied  according  to  demand.  Sick 
benefits  are  paid  for  twelve  weeks  after  the  first  week,  and 


76  INDUSTRIAL  INSURANCE 

not  more  than  $50  death  benefit.  In  the  report  for  the  year 
ending  January  2,  1906,  it  was  said  there  were  513  members, 
121  orders  on  the  treasurer,  16  regular  and  2  extra  assess- 
ments, and  $1,865  benefits  paid  out. 

In  the  Deere  &  Co.  Employees'  Association,  Moline, 
Illinois,  membership  is  voluntary;  the  executive  committee 
is  elected  by  the  members  who  are  divided  into  two  classes, 
the  Senior  whose  wages  are  over  $7  weekly,  and  the  Junior 
who  receive  less  than  $7.  The  entrance  fee  is  25  cents;  the 
assessment  for  paying  indemnity  is  25  or  15  cents.  The 
weekly  sick  benefit  is  $5  or  $3  weekly,  after  the  first  week, 
during  twelve  weeks;  the  funeral  payment  is  $25  or  $15. 
The  report  of  December  9,  1905,  mentions  582  members, 
9  payments  of  funeral  benefits,  and  100  cases  of  aid  to  the 
sick.  The  average  cost  per  member  was  $3  and  the  total 
expenditures  for  the  year  $2,041.80.  The  firm  contributed 
$250  to  the  fund. 

Gas  Company  Mutual  Aid  Society,  New  York.  Only 
employees  of  the  corporation  under  forty-five  years  of  age, 
after  medical  examination,  can  become  members.  The 
mortuary  fund  must  be  invested  either  in  federal,  state,  or 
municipal  bonds,  or  in  mortgages.  Each  member  pays  an 
entrance  fee  for  medical  examination  of  $2,  yearly  dues  of 
50  cents  for  costs  of  administration,  and  monthly  dues  of 
50  cents.  The  death  benefit  is  $300.  If  a  member  leaves 
the  employment  of  the  corporation,  he  receives  back  all  he 
has  paid  into  the  mortuary  fund.  There  is  a  Friendly  Aid 
Society  of  employees  whose  members  pay  monthly  dues 
of  30  cents  and  receive  in  sickness,  after  five  days,  $6  weekly 
during  twelve  weeks. 

Osborne  Relief  Association,  Auburn,  New  York,  now  a 
branch  o>f  the  International  Harvester  Company.  This 
society  of  employees  was  organized  in  1878.  In  the  first 
class,  where  wages  are  over  $i  per  day,  the  monthly  dues 


LOCAL  RELIEF  SOCIETIES  77 

are  50  cents,  while  those  in  the  lower  wage  class  pay  25 
cents.  The  weekly  benefit  in  case  of  illness  or  disability 
caused  by  injury  is  $6  during  two  weeks  and  afterward  $4 
during  twelve  weeks ;  only  by  consent  of  the  executive  com- 
mittee may  the  sick  benefit  be  granted  for  a  longer  period. 
The  death  benefit  is  $ioo.1 

The  Mutual  Aid  Society  of  the  McCormick  Reaper 
Factory,  Chicago,  was  organized  in  1882.  Employees  of 
the  firm,  between  eighteen  and  forty-five  years  of  age,  sound 
in  body  and  mind,  and  moral  in  conduct,  are  eligible  to 
membership.  The  entrance  fee  for  new  members  is  ordi- 
narily $3,  but  for  those  over  40  years  and  under  45  years  it 
is  $5.  The  quarterly  dues  are  $i.  Fines  are  imposed  on 
members  or  officers  of  the  society  for  the  neglect  of  their 
duties.  Assessments  are  levied  to  keep  up  the  fund. 

After  the  second  week  a  weekly  sick  benefit  of  $5  is 
paid  during  twenty-six  weeks  in  the  same  year.  A  member 
placed  in  quarantine  is  paid  his  sick  benefit.  The  funeral 
benefit  is  $50.  The  by-laws  are  printed  in  both  German 
and  English,  as  many  of  the  members  are  Germans.  This 
is  a  significant  fact  in  many  localities,  for  the  Germans 
generally  are  aware  that  in  their  fatherland  the  methods 
of  insurance  are  vastly  superior  to  those  in  this  country, 
and  they  are  quietly  but  steadily  creating  a  public  sentiment 
in  favor  of  better  plans. 

The  Garden  City  Sick  Benefit  Association  of  the  painters 
in  the  Deering  Works,  Chicago.  A  new  member  pays  30 
cents  for  entrance  fee  and  must  submit  to  a  medical  exam- 
ination. When  a  member  dies  or  his  wife  dies  an  assess- 
ment is  levied  for  the  fund.  Sick  benefits  of  $5  are  paid 
during  thirteen  weeks,  unless  the  cause  of  the  illness  is  vice 

1  These  schemes  are  to  be  supplemented  by  a  larger  system  which 
will  be  noticed  in  chapter  vii.  They  are  mentioned  here  as  illustrations 
of  a  stage  of  transition  to  a  better  place. 


78  INDUSTRIAL  INSURANCE 

or  drunkenness.  The  funeral  benefit  in  case  of  the  death 
of  a  member  or  a  member's  wife  is  $50,  and  $10  are  granted 
for  flowers  for  the  funeral. 

The  Adams  &  Westlake  Employees'  Benefit  Association, 
Chicago,  was  organized  in  1888.  A  representative  of  the 
company  administers  the  fund  and  membership  is  obligatory 
on  all  employees.  All  new  employees  must  sign  a  contract 
as  a  condition  of  employment.  Here  as  in  some  other  cases 
we  discover  that  "compulsory  insurance"  is  not,  as  some 
claim,  foreign  to  the  American  mind,  when  common-sense 
shows  that  it  is  a  condition  of  efficient  working  of  the  plan ; 
but  compulsion  by  employers  is  apt  to  be  more  unfair  than 
compulsion  by  law.  The  entrance  fee  in  this  association  is 
50  cents,  or  25  cents  for  the  lower  wage  class ;  the  dividing 
line  between  the  two  classes  being  the  rate  of  more  or  less 
that  I2j^  cents  per  hour.  The  monthly  dues  are  25  or  15 
cents;  the  weekly  sick  benefit  is  $6  or  $3.90,  after  the  first 
week,  during  three  weeks;  and  the  death  benefit  is  $50  or 
$30.  The  report  for  the  year  ending  December  31,  1905, 
shows  receipts,  including  $150  from  the  company,  of  $1,976. 
The  expenditures  were  in  ninety-six  cases  of  sickness  and 
two  of  death,  $1,363.00.  In  1906  the  receipts  were  doubled. 

The  Silversmiths'  Beneficial  Society,  Providence,  Rhode 
Island,  was  organized  by  the  employees  of  the  Gorham 
Manufacturing  Co.  in  1889.  The  administration  is  con- 
ducted by  elected  representatives  of  the  membership.  The 
physician  receives  $2  annually  from  each  member,  payable 
quarterly  from  the  fund.  The  monthly  dues  are  $i ;  the 
weekly  sick  benefit,  during  the  first  week,  is  $5  and  during 
the  following  thirteen  weeks  $10,  then  during  twelve  weeks 
it  is  $5.  The  treasury  pays  the  fees  for  surgical  or  medical 
treatment.  At  the  end  of  the  year  all  the  money  in  the 
treasury  is  divided  among  the  members.  The  membership 
reported  was  397,  and  the  expenditures  during  1905  were 


LOCAL  RELIEF  SOCIETIES  79 

$2,397.  The  Silversmiths'  Mutual  Aid  Society  was  organ- 
ized in  1865,  has  670  members,  and  paid  out  in  1905, 
$6,112.  The  weekly  dues  are  20  or  12  cents  according  to 
wage  class;  sick  benefits,  $4  for  the  first  week,  $8  during 
thirteen  weeks,  and  then  $4  during  disability.  The  death 
benefit  paid  is  $40.  In  the  second  class  half  the  rate  of 
benefits  prevails.  The  Gorham  Manufacturing  Company 
does  not  contribute  to  the  fund  of  the  association,  but  has 
its  own  pension  fund. 

The  Elgin  National  Watch  Co.  Employees'  Aid  Fund, 
Elgin,  Illinois.  The  object  of  this  society  is  to  provide  sick, 
accident,  and  death  benefits  for  employees  of  the  company. 
The  managers  have  an  agreement  with  the  society  under 
which  the  company  pays  about  $5,000  each  year  to  the  fund, 
or  about  half  the  amount  paid  by  the  employees.  Member- 
ship is  voluntary,  and  the  management  rests  with  officers 
elected  by  the  society  itself.  The  men  pay  25  cents  and  the 
women  15  cents  monthly  dues,  and  these  dues  are  collected 
by  the  cashier  of  the  firm  by  deductions  from  the  pay-roll 
in  accordance  with  the  contract.  The  benefit  paid  after  the 
first  week  during  six  months  is  $i  per  day,  and  for  women 
60  cents;  the  death  benefit  is  $50.  The  reserve  fund  may 
not  fall  below  $3,000  nor  rise  above  $5,000. 

Quite  similar  arrangements  are  found  among  the  em- 
ployees of  the  Atlas  Works,  Indianapolis,  Indiana,  and  of 
T.  B.  Laycock  Manufacturing  Co.,  in  the  same  city,  and 
with  the  National  Cash  Register  Co.,  of  Dayton,  Ohio,  and 
Halle  Bros.,  Cleveland,  Ohio.  Indeed,  only  a  thorough 
investigation  by  the  agents  of  the  national  government  can 
adequately  present  the  statistics  of  the  numerous  associa- 
tions of  this  kind  found  in  all  parts  of  the  nation. 

Some  of  the  street  railway  companies  favor  and  aid  the 
mutual  benefit  associations  of  their  employees,  although 
these  societies  have  an  independent  and  self-supporting 


8o  INDUSTRIAL  INSURANCE 

existence.  Thus  there  is  the  Chicago  City  Railway  Em- 
ployees' Mutual  Aid  Association,  which  was  organized 
September  26,  1894.  Any  employee  of  the  corporation 
may  become  a  member  after  medical  examination  and  pay- 
ment of  an  entrance  fee,  if  under  fifty  years  of  age.  Any 
member  may  continue  to  retain  his  claim  for  benefits  after 
leaving  the  employment  of  the  company  if  he  pays  his  dues, 
but  he  is  not  permitted  to  become  a  bartender  or  saloon- 
keeper. Any  member  who  drinks  alcoholic  liquors  to  excess 
is  first  warned,  and  if  he  persists  is  expelled.  The  society 
elects  directors  and  they  choose  the  president,  vice-president, 
and  medical  examiner.  The  dues  are  50  cents  a  year  and 
assessments  are  levied  to  cover  the  expenditures.  The 
contributions  are  collected  by  the  cashier  of  the  company 
who  deducts  the  amounts  from  wage  payments  and  pays 
over  the  amount  to  the  treasurer  of  the  society.  The  death 
benefit  is  $500,  whether  the  cause  of  death  is  accident  or 
sickness. 

Defects  and  limitations  of  the  local  mutual  aid  associa- 
tions.— The  principal  evil  in  connection  with  these  voluntary 
local  societies  is  that  they  are  generally  organized  and 
administered  without  the  aid  of  competent  actuaries  and 
are  utterly  without  scientific  foundations.  A  new  society 
copies  the  by-laws  of  an  older  society  without  any  kind  of 
understanding  of  the  probable  outcome  of  the  plan.  The 
state,  which  is  just  now  so  solicitous  for  the  life  insurance 
arrangements  of  rich  insurers  who  are  able  to  take  care  of 
their  own  interests,  totally  neglects  these  obscure,  but  well- 
meaning,  insurance  societies  of  the  workingmen.  For  this 
reason  many  of  the  local  societies  are  deprived  of  that 
scientific  guidance  which  they  so  greatly  need  in  order  to 
make  them  safe  and  economical,  and  adapt  their  tariffs  to 
age,  sex,  and  conditions  of  employment.  Usually  the  offi- 
cers of  the  societies  are  honest,  and  even  if  they  were  thieves 


LOCAL  RELIEF  SOCIETIES  8 1 

there  would  not  be  much  to  steal ;  at  best  they  are  without 
business  knowledge  and  without  acquaintance  with  actuarial 
requirements.  Membership  is  purely  voluntary  in  most 
cases,  and  the  claims  of  members  rest  on  no  legal  protection. 
There  is  no  bond  of  connection,  no  federation,  no  system 
covering  a  large  territory.  An  epidemic  which  prevails  in 
a  shop  or  neighborhood  destroys  the  fund  when  it  is  most 
needed.  If  the  officers  are  untrue  to  their  trust  they  can 
be  reached  only  through  a  tedious  process,  and  it  is  cheaper 
to  let  them  run  away.  The  local  society  is,  in  respect  to  the 
state,  an  independent  organization,  not  a  part  of  a  great 
body  in  which  the  union  of  members  makes  each  secure. 
If  a  member  moves  from  one  place  to  another,  he  loses  his 
insurance  and  all  his  rights.  It  is  sometimes  argued  that 
we  cannot  have  state  insurance  in  the  United  States  because 
our  working  population  is  so  mobile;  a  moment's  reflection 
will  turn  this  fact  into  an  unanswerable  argument  for  com- 
pulsory insurance  on  the  widest  scale  possible.  Just  because 
the  wage-earners  are  so  fond  of  going  from  place  to  place, 
just  because  they  are  forced  by  the  rapid  fluctuations  and 
changes  in  industry  to  pass  from  employer  to  employer, 
is  a  general  system  desirable  and  even  necessary  to  genuine 
insurance.  No  doubt  these  societies  are  serving  a  good 
purpose  in  slightly  mitigating  the  sufferings  of  families  in 
distress;  they  are  a  little  better  than  taking  up  collections; 
but  they  remain  still  on  the  borderland  of  charity,  with 
much  of  the  injustice,  hardship,  and  uncertainty  of  depend- 
ence on  gifts.  Their  best  permanent  service  is  to  educate 
the  nation  to  a  sense  of  obligation  to  provide  an  adequate 
system  of  insurance  for  all  citizens. 

There  is  positive  injustice  in  the  arrangement  whenever 
the  burden  of  accident  insurance  is  thrown  on  these  local 
shop  associations  without  substantial  contributions  of  at 
least  half  the  cost  from  the  employers ;  for  in  such  arrange- 


82  INDUSTRIAL  INSURANCE 

ments  the  modern  principle  of  risque  profession/net  is  com- 
pletely ignored,  and  the  workmen  are  compelled  to  bear 
unaided  the  cost  of  production  which  arises  from  injuries 
due  to  the  industry. 

Thus  far  neither  employers  nor  workmen  in  this  country 
have  given  much  consideration  to  this  aspect  of  the  situa- 
tion, and  therefore  the  moral  sense  has  not  been  wounded. 
But  in  no  other  great  nation  has  this  principle  been  so 
thoroughly  set  at  naught  as  with  us  where  the  risks  are 
greatest.  It  is  altogether  incredible  that  this  injustice  will 
long  remain  hidden,  and  the  discussions  of  the  last  years 
have  placed  it  in  clearer  light  than  ever  before  in  our  history. 

It  is  to  be  hoped  that  the  noble  revelation  of  Miss  Jane 
Addams  will  speedily  help  to  work  the  cure  of  the  disease 
which  she  describes: 

In  a  Republic  founded  upon  a  revulsion  from  oppressive  govern- 
ment we  still  keep  the  police  close  to  their  negative  role  of  preserving 
order  and  arresting  the  criminal.  The  varied  functions  they  perform 
in  Germany  would  be  impossible  in  America,  because  it  would  be  hotly 
resented  by  the  American  business  man  who  will  not  brook  any 
governmental  interference  in  industrial  affairs.  The  inherited  instinct 
that  government  is  naturally  oppressive,  and  that  its  inroads  must  be 
checked,  has  made  it  a  matter  of  principle  and  patriotism  to  keep  the 
functions  of  government  more  restricted  and  more  military  than  has 
become  true  in  military  countries. 

And  then  she  pleads  for  the  union  of  local  pride  in  asso- 
ciated effort  for  the  common  good  with  patriotism  itself 
and  describes  the  genuine  joy  of  immigrants  in  their  societies 
of  insurance,  imperfect  as  we  have  seen  they  are. 

Almost  every  Sunday  in  the  Italian  quarter  in  which  I  live  various 
mutual  benefit  societies  march  with  fife  and  drum  and  with  a  brave 
showing  of  banners,  celebrating  their  achievement  in  having  surrounded 
themselves  by  at  least  a  thin  wall  of  protection  against  disaster,  upon 
having  set  up  their  mutual  good  will  against  the  day  of  misfortune. 
These  parades  have  all  the  emblems  of  patriotism;  indeed,  the  asso- 
ciations present  the  primitive  core  of  patriotism,  brothers  standing  by 


LOCAL  RELIEF  SOCIETIES  83 

each  other  against  hostile  forces  from  without.  I  assure  you  that  no 
Fourth  of  July  celebration,  no  rejoicing  over  the  birth  of  an  heir  to 
the  Italian  throne,  equals  in  heartiness  and  sincerity  these  simple  cele- 
brations. Again  one  longs  to  pour  into  the  government  of  their  adopted 
country  all  this  affection  and  zeal,  this  real  patriotism.  A  system  of 
State  insurance  would  be  a  very  simple  device  and  secure  a  large 
return.3 

The  state  might  well  accept  this  genuine  product  of  ele- 
mentary patriotism,  these  little  groups  of  brave  pioneers, 
adopt  their  societies  into  a  great  and  powerful  system  cover- 
ing the  land,  and  at  the  same  time  retain  all  the  advantages 
of  self-government  in  small  societies  in  which  men  gain 
their  best  preparation  for  participation  in  the  larger  affairs 
of  political  action. 

2  Newer  Ideals  of  Peace,  pp.  90,  91. 


CHAPTER  III 
BENEFIT  FEATURES  OF  THE  TRADE-UNIONS 

In  the  United  States,  according  to  a  recent  list,  there  are 
in  affiliation  with  the  American  Federation  of  Labor  113 
national  and  international  unions,  organized  in  28,681  lodges 
or  local  unions.  The  total  membership  was  estimated  at 
1,500,000,  but  this  estimate  was  not  based  on  reliable  sta- 
tistics, and  it  is  well  known  that  the  number  of  members 
fluctuates,  sometimes  rapidly,  with  changes  in  economic 
conditions.  The  accompanying  table  represents  the  names 
of  the  unions,  their  membership,  and  their  total  expenditures 
for  various  kinds  of  insurance  for  the  year  IQO5.1 

American  Federation  of  Labor  (local  organizations) 28,600 

Actors'  National  Protective  Union  of  America 1,100 

Bakery  and  Confectionery  Workers'  International  Union  of 

America 12,000 

Barbers'  International  Union,  Journeymen 22,700 

Bill  Posters  and  Billers  of  America,  National  Alliance 1,400 

Blacksmiths'  International   Brotherhood 10,000 

Blast  Furnace  Workers  and  Smelters  of  America 1,500 

Boiler  Makers  and  Iron  Ship  Builders  of  America 13,400 

Bookbinders'    International    Brotherhood 6,600 

Boot  and   Shoe  Workers'  Union 32,000 

Brewery  Workmen,  International  Union  of 34,000 

Brick,  Tile  and  Terra-Cotta  Workers'  Alliance,  International  4,100 
Bridge  and  Structural  Iron  Workers,  International  Associa- 
tion of 10,000 

Broom  and  Whisk  Makers'  Union,  International 1,000 

Brushmakers'  Union,  International 700 

Building  Employees  of  America   (in  January,  1904,  800) .... 

Cap  Makers  of  North  America,  United  Cloth  Hat  and 2,600 

Carpenters  and  Joiners  of  America,  United  Brotherhood  of..  143,200 

1  Bulletin  of  the  Department  of  Labor  (New  York,  1906),  p.  no; 
Chicago  Daily  News  Almanac,  1906,  pp.  114-16. 

84 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS  85 

Carpenters  and  Joiners,  Amalgamated  Society  of 4,800 

Carriage  and  Wagon  Workers,  International 3,200 

Car  Workers,  International  Association  of 5>°°° 

Cement  Workers,  American  Brotherhood  of 3>6oo 

Chainmakers'  National  Union  of  the  United  States  of  America  600 

Cigarmakers'  International  Union  of  America 41,400 

Clerks'  International  Protective  Association,  Retail 50,000 

Clerks,    International    Association   of    Railway    (in   January, 

1904,  600) 

Compressed  Air  Workers,  International  Union 1,200 

Coopers'  International  Union  of  North  America 5,6oo 

Curtain  Operatives  of  America,  Amalgamated  Lace 700 

Cutting  Die  and  Cutter  Makers'  International  Union 300 

Electrical  Workers  of  America,  International  Brotherhood. .  21,000 

Elevator   Constructors 2,200 

Engineers'   International   Union,   Steam 17,500 

Expressmen,  Brotherhood  of  Railway  (in  January,  1904,  300) 

Firemen,    Stationary 12,200 

Flour  and  Cereal  Mill  Employees 9°° 

Foundry   Employees 1,000 

Freight  Handlers  and  Warehousemen's  Union 3,400 

Fur    Workers 400 

Garment  Workers   of  America 31,900 

Garment  Workers'  Union,  Ladies' 1,800 

Glass  Bottle  Blowers'  Association 7,000 

Glass  House  Employees 200 

Glass  Snappers'  Protective  Association,  Window 1,200 

Glove  Workers'  Union 1,100 

Gold  Beaters'   Protective  Union 300 

Granite  Cutters'  National  Union 10,300 

Hatters  of  North  America,  United 8,500 

Hod  Carriers'  and  Building  Laborers'  Union 4,7OO 

Horseshoers'  Union,  Journeymen 4,200 

Hotel  and  Restaurant  Employees'  Alliance  and   Bartenders' 

League 38,700 

Insulators  and  Asbestos  Workers 300 

Iron,  Steel  and  Tin  Workers,  Amalgamated  Association  of..  10,000 

Jewelry  Workers'  Union 7°° 

Knife   Grinders'   Union   Table 300 

Knife  Blade  Grinders'  and  Finishers'  Union,  Pocket 200 


86  INDUSTRIAL  INSURANCE 

Lathers'  International  Union,  Wood,  Wire,  and  Metal 4,300 

Laundry  Workers'  Union,  Shirt,  Waist  and 4,600 

Leather  Workers  on  Horse  Goods 4,000 

Leather  Workers'  Union,  Amalgamated 1,000 

Longshoremen's  Association    47,800 

Machinists,  International  Association  of 48,500 

Maintenance-of-Way  Employees,  International  Brotherhood  of  12,000 

Marble  Workers'  Association 1,900 

Mattress  Spring  and  Bedding  Workers'  Union 1,500 

Meat  Cutters  and  Butcher  Workmen 6,200 

Metal  Polishers,  Buffers,  Platers  and  Brass  Workers 10,300 

Mine  Managers  and  Assistants'  Mutual  Aid  Association 400 

Mine  Workers  of  America,  United 261,900 

Molders'   Union,   Iron 30,000 

Musicians,    Federation    of 30,800 

Oil  and  Gas  Well  Workers 400 

Painters,  Decorators  and  Paperhangers,  Brotherhood  of 54,200 

Paper  Box,  Bag  and  Novelty  Workers'  Union 900 

Paper  Makers,  United  Brotherhood  of 5,ooo 

Pattern  Makers'  League 3,6oo 

Pavers  and  Rammermen,  Union  of 1,000 

Paving  Cutters'  Union 1,300 

Photo-Engravers'  Union 2,200 

Piano  and  Organ  Workers'  Union 9,000 

Plumbers,  Gas  Fitters,  Steam  Fitters,  Helpers'  Association...  15,000 

Potters,  Operative 5,6oo 

Powder  and  High  Explosive  Workers 500 

Print  Cutters'  Association 400 

Printers  and  Color  Mixers,  Association  of  Machine 400 

Printers'  Association,  Machine  Textile 400 

Printers'  Union,  Steel  and  Copperplate 1,100 

Printers'    Association 200 

Printing  Pressmen's  Union 17,000 

Roofers'  Union,  Slate  and  Tile 600 

Quarry  Workers'  Union 3,600 

Rubber  Workers'  Union 100 

Sawsmiths'  Union 300 

Seaman's  Union 19,500 

Sheet    Metal    Workers'    Union 13,000 

Shingle  Weavers'  Union 1,600 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS  87 

Shipwrights,  Joiners,  and  Calkers 2,400 

Slate    Workers 900 

Spinners'  Cotton  Mule  Union 2,200 

Stage  Employees'  Alliance,  Theatrical 5,5OO 

Stereotypers'   and  Electrotypers'   Union 2,800 

Stove   Mounters'   Union 1,500 

Street  and  Electric  Railway  Employees'  Association 30,000 

Tack  Makers'  Union 200 

Tailors'  Union,  Journeymen 16,000 

Teamsters'    Brotherhood 78,300 

Telegraphers,  Order  of  Railroad 15,000 

Telegraphers'  Union,  Commercial 2,000 

Textile  Workers,  United 10,000 

Tile  Layers  and  Helpers'  Union,  Ceramic,  Mosaic  and  Encaustic  1,400 

Tin  Plate  Workers'  Protective  Association 1,400 

Tobacco  Workers'  Union 5,400 

Travelers'  Goods  and  Leather  Novelty  Workers'  Union...  1,300 

Typographical  Union 46,700 

Upholsterers'    Union 2,800 

Watch  Case  Engravers'  Association 300 

Weavers'  Association,  Elastic  Goring 100 

Wire  Weavers'  Protective  Association 300 

Wood  Carvers'  Association 1,600 

Woodsmen  and  Saw-Mill  Workers'  Brotherhood 1,100 

Wood  Workers'  Union,  Amalgamated 20,000 


Total  membership 1,494,300 

During  the  year  1905  the  national  unions  of  the  Ameri- 
can Federation  of  Labor  paid  out  in  benefits  as  follows : 

Death   benefits $  742,421.23 

Death   benefits    (widows) 24,800.00 

Sick  benefits 582,874.13 

Traveling  expenses 62,989.71 

Insurance  of  tools 5,180.41 

Out-of-work  benefits 85,050.72 


Total  $1,503,316.20 

* 

But  these  figures  do  not  by  any  means  represent  the 


88  INDUSTRIAL  INSURANCE 

expenditures  and  services  of  the  unions,  because  the  local 
lodges  assist  with  their  funds  and  care,  very  often  without 
reporting  to  or  acting  through  the  national  officers.  Of 
much  of  this  kind  of  service  we  have  no  records. 

Accident  insurance  of  the  trade-unions. — A  few  ex- 
amples of  methods  described  in  the  letters  from  secretaries 
and  in  the  annual  reports  and  by-laws  will  serve  to  explain 
the  working  of  this  kind  of  insurance  in  the  unions.  The 
Amalgamated  Society  of  Carpenters  and  Joiners  pays  a 
lump  sum  of  $700  in  case  of  complete  disability,  and  from 
$175  to  $350  in  case  of  partial  disability.  From  the  year 
1860  to  1904  this  organization  paid  out  in  accident-insur- 
ance benefits  $335,825.  The  Cigarmakers'  Union  pays  a 
lump  sum  when  a  member  has  become  blind  or  lost  both 
hands.  The  Iron  Moulders'  Union  pays  to  the  partially 
disabled  workman  from  $100  to  $200,  and  to  the  totally 
disabled  member  a  sum  which  is  determined  by  the  adminis- 
trators of  the  fund  according  to  circumstances.  In  the 
Amalgamated  Association  of  Street  and  Electric  Railway 
Employees  the  injured  member  receives  $100.  The  Inter- 
national Brotherhood  of  Maintenance-of-Way  Employees 
pays  in  case  of  total  disability  from  $500  to  $1,000.  The 
Amalgamated  Glass  Workers  pay  in  case  of  permanent 
disability  from  $75  to  $100.  So  far  as  we  can  draw  con- 
clusions from  correspondence  with  the  unions  in  affiliation 
with  the  American  Federation  of  Labor,  it  must  be  said  that 
they  have  rarely  achieved  important  results  in  the  field  of 
accident  insurance.  The  tables  of  statistics  furnish,  it  is 
true,  only  a  part  of  the  facts;  perhaps  a  considerable  part  of 
the  expenditures  credited  to  sickness  insurance  and  death 
benefits  is  really  accident  insurance.  Disability  for  labor, 
prolonged  illness,  and  death  are  not  infrequently  the  results 
of  accidents  of  occupations  or  of  other  causes.  There  are 
some  special  reasons  for  the  reluctance  of  the  unions  to  take 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS         89 

up  accident  insurance.  It  seems  probable  that  many  mem- 
bers of  the  unions  hesitate  to  pay  premiums  into  a  common 
treasury  for  this  purpose,  for  fear  the  money  might  be 
expended  upon  strikes.  Further,  the  traditional  law  of 
employers'  liability  has  educated  the  workmen  to  expect 
their  protection  from  the  awards  of  courts.  This  hope  is 
generally  illusory;  but  the  occasional  enormous  awards 
awaken  a  gambling  instinct  in  thousands  of  persons  where 
only  one  will  receive  substantial  indemnity  by  prosecuting 
the  employer.  The  workmen  in  certain  dangerous  occupa- 
tions, especially  some  of  the  railway  employees,  enjoy  the 
protection  of  the  relief  departments  as  well  as  of  their  union 
benefits.  Well-paid  workmen  in  .dangerous  trades  can  se- 
cure accident  insurance  by  paying  relatively  high  premiums 
in  casualty  companies,  or  they  can  make  special  contracts 
with  private  hospitals  to  furnish  medical  care  during  illness, 
a  frequent  rate  of  payment  being  $10  to  $12  a  year  for 
assurance  of  such  relief  in  hospital  or  at  home.  In  certain 
localities  the  employers  have  become  accustomed  to  paying 
the  costs  of  medical  care,  and  at  least  part  of  the  wages, 
when  the  accident  was  due  to  mishap  in  the  industry  itself. 
All  these  causes  co-operate  to  diminish  the  interest  of  work- 
men in  their  union  accident  benefit,  and  they  are  much  more 
likely  now  than  in  former  years  to  regard  the  organization 
of  such  insurance  as  a  duty  to  be  laid  upon  the  business 
which  causes  the  risks.  The  doctrine  of  risque  professionnel 
is  very  rapidly  gaining  adherents  in  this  country. 

Sickness  insurance  of  the  unions. — If  we  turn  to  sick- 
ness insurance,  we  are  upon  ground  where  the  local  unions 
are  found  to  be  admirable  organs  of  administration.  The 
members  of  a  lodge  are  exposed  to  similar  risks,  they  resem- 
ble each  other  in  physical  nature,  they  know  each  other's 
habits,  they  are  able  to  detect  imposture  and  to  manage 
the  simple  affairs  of  a  form  of  insurance  which  does  not 


go  INDUSTRIAL  INSURANCE 

require  heavy  reserves  and  large  investments   of   funds. 
Therefore    it   is   that   there   are   very    few    organizations 
for  sick  insurance  directly  by  national  trade-unions,  but 
very  many  among  the  local  lodges  of  the  national  bodies. 
At  the  same  time  we  have  not  adequate  statistics  of  the 
extent  of  this  insurance,  because  the  lodges  are  not  required, 
as  a  rule,  to  report  their  work  in  this  field  to  the  central 
office.    Sometimes  we  read  in  the  reports  and  correspondence 
the  statement  that  the  members  of  the  unions  seek  their 
sick  insurance  in  the  fraternal  societies  which  are  to  some 
extent  in  rivalry  with  the  unions.    The  members  of  a  union 
in  this  country  have  been  taught  by  circumstances  and  by 
discussions  to  regard  their  trade  organization  as  militant, 
as  an  army  to  wrest  concessions  from  employers  in  relation 
to  wages,  hours,  and  conditions  of  employment,  while  the 
more  pacific  and  constant  needs  of  sociability  and  provident 
thrift  may  be  met  in  other  ways.    In  new  unions  the  leaders 
find  it  very  difficult  to  induce  members  to  set  the  dues  high 
enough  to  cover  more  than  the  bare  costs  of  administration 
and  war.    Our  unions  have  not  been  so  long  established  as 
those  of  Great  Britain,  and  have  not  yet  settled  down  as 
permanent  organizations  with  varied  ends ;  and  their  fluctua- 
ting membership   composed   of   men   of   all   nationalities, 
have  only  imperfectly  learned  as  yet  how  to  trust  each  other 
and  maintain  large  funds  under  the  control  of  leaders  who 
sometimes  betray  them.     Many  of  the  members  of  unions 
are  connected  with  powerful  church  orders,  whose  funds 
furnish  means  in  sickness  and  brotherly  attention  in  trouble. 
After  making  deductions  for  all  these  reasons,  there  still 
remains  a  very  important  work  of  sickness  insurance  in  the 
hands  of  the  lodges  of  trade-unions.    Of  these  we  may  cite 
certain  typical  examples,  although  complete  records  are  not 
available. 

In  the  United  Brotherhood  of  Carpenters  and  Joiners 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS         91 

sick  benefits  are  provided  by  local  lodges  without  interfer- 
ence from  the  national  officers.  The  International  Associa- 
tion of  Machinists  reports  200  lodges,  and  during  the  year 
1905  they  paid  out  in  sick  benefits  the  sum  of  $26,617.43. 
Some  of  the  lodges  of  the  Carriage  and  Wagon  Workers' 
International  Union  have  a  sick-benefit  feature,  but  this 
is  not  general  in  this  organization.  Very  peculiar  and  inter- 
esting is  the  method  of  Union  No.  144  of  the  Cigarmakers' 
Union  in  the  city  of  New  York.  The  members  pay  monthly 
dues  of  25  cents,  and  one  who  is  disabled  by  illness  is  paid 
$5  a  week  during  13  weeks.  If  a  surplus  remains  in  the 
treasury  after  paying  benefits,  it  is  divided  at  Christmas 
among  the  members.  The  union  is  composed  of  auxiliary 
associations,  each  having  from  25  to  30  members.  In  the 
Amalgamated  Society  of  Carpenters  and  Joiners  the  sick 
benefit  is  $4.20  weekly  for  26  weeks,  and  afterward  $2.10 
per  week;  the  younger  members  pay  half -rates  and  receive 
half -benefits.  The  entire  sum  expended  for  sick  insurance 
during  the  years  1860  to  1904  was  $3,446,465,  and  in 
addition  to  this  $233,170  were  expended  in  special  relief. 
The  Iron  Moulders'  Union  of  North  America  designates 
8  cents  of  the  weekly  contribution  of  each  member  to  the 
sick-benefit  fund,  and  out  of  this  fund  a  sick  member 
receives  $5.25  per  week  after  the  first  week  during  13  weeks. 
The  United  Association  of  Journeymen  Plumbers,  Gas 
Fitters,  Steam  Fitters'  Helpers  pays  weekly  benefits  of  $5 
for  13  weeks,  after  7  days.  The  Tailors'  Union  pays  the 
men  in  case  of  illness  $4  a  week,  and  the  women  $3.  In 
the  year  1904  the  61  divisions  of  the  Amalgamated  Associa- 
tion of  Street  and  Electric  Railway  Employees  of  America 
paid  out  $20,002.73,  the  rates  of  benefits  ranging  from  $2 
to  $7  weekly.  The  Journeymen  Barbers  receive  $5  weekly 
during  20  weeks.  The  Tobacco  Workers  have  a  sick  benefit 
of  $3  weekly  for  13  weeks,  after  7  days,  on  condition  that 


92  INDUSTRIAL  INSURANCE 

the  person  at  the  time  of  illness  has  already  paid  contribu- 
tions during  6  months.  The  Boot  and  Shoe  Workers' 
Union  pays  $5  weekly  for  13  weeks  after  7  days. 

Old-age  and  invalidism  insurance. — While  the  direct 
provision  for  old-age  insurance  is  rare  among  the  trade- 
unions,  it  is  probable  that  other  benefits  occasionally  cover 
the  wants  of  members  who  are  too  feeble  or  aged  to  work 
steadily.  It  is  just  this  class  of  members  who  would  be 
most  severely  tempted  to  work  for  lower  than  union  rates 
of  wages  if  they  were  not  protected  by  benefits.  The 
Cigarmakers'  Union  expends  a  great  deal  of  money  on  out- 
of-work  benefits,  and  the  managers  of  this  fund  inform  us 
that  a  large  number  of  the  recipients  of  this  relief  are  infirm 
persons  who  cannot  earn  the  average  wages,  and  that  many 
of  these  are  advanced  in  years.  Here  we  have  the  begin- 
nings of  old-age  pensions  concealed  under  other  forms  of 
insurance.  The  Granite  Cutters*  Association  has  begun  to 
organize  its  old-age  pension  fund.  The  Fraternal  Associa- 
tion of  Machinists  has  approved  a  system  under  which  it  is 
proposed  to  pay  to  a  member  on  reaching  the  age  of  65 
years  the  sum  of  $500,  if  he  has  already  paid  dues  as  mem- 
ber during  10  years.  But  the  money  for  establishing  the 
scheme  was  not  in  hand  at  last  report.  The  United  Associa- 
tion of  Journeymen  Plumbers  offers  an  old-age  pension  of 
$300  after  a  person  has  been  a  member  for  20  years,  of 
$400  after  25  years,  and  of  $500  after  30  years.  The  Amal- 
gamated Association  of  Street  and  Electric  Railway  Em- 
ployees accepted  a  plan  in  1905  according  to  which  any 
member  over  65  years  of  age  would  receive  from  $i  to  $3 
per  day;  but  the  fund  is  not  yet  provided.  The  Amalga- 
mated Society  of  Carpenters  and  Joiners  pays  to  the  aged 
member  weekly  from  $2.45  to  $2.80.  This  union  has  thus 
paid,  during  the  years  1860  to  1904  the  sum  of  $1,273,915. 
The  Amalgamated  Society  of  Engineers,  a  union  of  Eng- 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS        93 

lish  origin,  pays  old-age  pensions.  The  Pattern  Makers' 
League  of  North  America  has  adopted  the  plan  of  paying 
old-age  pensions  after  the  year  1920. 

A  diligent  and  extended  correspondence  has  thus  far 
.-Jed  only  the  feeble  beginnings  of  care  for  old  age  and 
for  permanent  invalids.  So  far  as  the  past  gives  evidence, 
we  most  look  in  an  entirely  different  direction  for  this  form 
of  protection;  although  under  suitable  legal  conditions  the 
machinery  of  the  unions  may  become  useful  in  building  up 
a  system  of  old-age  pensions. 

Death  bwfits.—In  the  field  of  so-called  "life-insur- 
ance," or,  more  properly,  the  provision  for  burial  benefits 
and  some  moderate  fund  for  widows,  the  trade-unions  have 
been  most  successful  Usually  the  effort  does  not  go  beyond 
securing  money  for  the  expenses  of  the  last  illness  and  the 
burial  expenses,  and  in  this  the  success  has  been  worthy 
of  mention;  for  many  thousand  families  have  been  spared 
the  misery  of  depending  on  alms  at  such  trying  times  in 
their  history.  In  most  of  the  unions  a  lump  sum,  which 
rarely  exceeds  $100,  is  paid  on  the  death  of  a  member; 
but  in  some  of  the  stronger  unions,  whose  members  enjoy 
high  wages,  the  benefit  is  larger. 

JThe  International  Shingle  Weavers*  Union  requires 
monthly  dues  of  40  cents  per  member,  and  the  death  benefit 
is  $75.  J])e  United  Brotherhood  of  Carpenters  and  Joiners 
pays  $100  to  $200  at  the  death  of  a  member,  and  $25  to  $50 
in  case  of  the  death  of  the  wife  of  a  member.  There  is  a 
class  of  members  called  "semi-beneficiary"  who  receive  $50 
funeral  benefit  The  monthly  dues  of  the  Granite  Cutters 
are  $i,  and  the  death  benefit  varies  according  to  classes  of 
members.  The  union  of  Wood,  Wire  and  Metal  Lathers 
pays  a  funeral  benefit  of  $50  to  $ioa  In  the  city  of  Chi- 
cago the  local  lodges  of  the  Elevator  Constructors  pay  a 
funeral  benefit  of  $120,  which  they  raise  by  means  of  an 


94  INDUSTRIAL  INSURANCE 

assessment.  The  union  of  Bridge  and  Structural  Iron 
Workers  collects  monthly  dues  of  35  cents,  and  pays  a  death 
benefit  to  the  family  of  $100.  The  Slate  and  Tile  Roofers, 
with  monthly  dues  of  13  cents,  pay  $100  death  benefit.  The 
Amalgamated  Society  of  Carpenters  and  Joiners  pays  $84 
on  the  occasion  of  death  of  a  member,  and  $35  at  the  death 
of  the  wife  of  a  member.  During  the  years  1860  to  1904 
this  union  paid  out  in  death  benefits  $617,905.  The  Associa- 
tion of  Machinists  pays  from  $50  to  $200.  The  members  of 
the  Stove  Mounters  and  Steel  Range  Workers  pay  monthly 
dues  of  5  cents,  and  also  an  assessment  at  the  death  of  a 
member;  but  under  this  plan  the  promised  death  benefit  of 
$100  is  not  entirely  covered.  The  death  benefit  in  the  Na- 
tional Amalgamated  Association  of  Iron  and  Steel  and  Tin 
Workers  amounts  to  $100;  the  contributions  are  10  cents, 
paid  quarterly,  and  a  general  fund  is  maintained.  The  mem- 
bers of  the  union  of  Iron  Moulders  pay  10  cents  weekly 
into  a  fund  and  16  per  cent,  of  the  proceeds  is  set  apart  for 
the  death-benefit  fund,  and  the  family  receives  according  to 
graded  scale  from  $100  to  $200.  The  Metal  Polishers, 
Buffers,  Platers,  Brass  Moulders,  and  Brass  and  Silver 
Workers  pay  $50  to  $100  death-benefit  fund,  and  the 
family  receives  according  to  graded  scale.  Some  of  the 
local  lodges  of  the  Carriage  and  Wagon  Workers'  Union 
pay  death  benefits,  but  not  the  majority  of  them.  The 
Journeymen  Plumbers,  Gas  Fitters,  Steam  Fitters  and 
Steam  Fitters'  Helpers  pay  $100  death  benefits,  and  the 
same  sum  is  paid  by  the  Elastic  Goring  Weavers  and  the 
Electrical  Workers.  At  a  cost  of  70  to  74  cents'  annual 
contribution  from  each  member  the  Journeymen  Tailors 
are  able  to  pay  a  death  benefit  of  $25  to  $100.  Some  of  the 
local  lodges  of  the  United  Garment  Workers  pay  funeral 
benefits.  The  members  of  the  Amalgamated  Association 
of  Street  and  Electric  Railway  Employees  contribute  5 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS         95 

cents  monthly  dues,  and  a  funeral  benefit  of  $100  is  paid 
the  family  of  a  deceased  person.  During  the  year  1904  the 
expenditures  of  22  local  unions  for  death  benefits  in  152 
cases  were  $6,949.25,  and  of  the  national  organization 
$15,850.  The  monthly  dues  in  the  International  Brother- 
hood of  Maintenance-of-Way  Employees  are  50,  60,  75 
cents,  according  to  age,  and  the  life-insurance  policy  prom- 
ises $500.  The  Photo-Engravers'  Union,  which  has  few 
members,  paid  out  during  the  year  1905  to  n  families 
$825  in  death  benefits.  The  members  of  the  Alliance  of 
Theatrical  Stage  Employees  pay  yearly  premiums  of  $3, 
and  in  case  of  a  death  the  family  receives  $100.  The  Watch 
Engravers'  Association  pays  a  benefit  not  to  exceed  $75, 
which  is  raised  by  levying  an  assessment  of  50  cents  after 
each  death.  A  small  sum  for  funeral  expenses  is  paid  by 
local  lodges  of  the  National  Print  Cutters'  Association.  The 
monthly  dues  in  the  International  Typographical  Union  are 
7^/2  cents,  and  the  local  lodges  pay  $70  funeral  expenses. 
In  the  year  1905  this  union  paid  out  $39,690,  and  since  1892 
in  all  $367,995.  The  death-rate  is  said  to  be  12  per 
thousand.  Most  of  the  local  lodges  of  the  Coopers'  Inter- 
national Union  pay  funeral  expenses.  The  Glass  Workers' 
Association  take  out  of  their  common  fund  $50  to  $75  for 
funeral  expenses;  during  the  year  1905  there  were  9  deaths, 
and  the  sum  expended  was  $600.  The  death  benefits  in  the 
union  of  Piano,  Organ,  and  Musical  Instrument  Workers 
are  $50,  $100,  or  $200,  according  to  class.  The  members 
of  the  Amalgamated  Meat  Cutters'  and  Butcher  Workmen's 
Union  pay  monthly  dues  of  5  cents,  and  the  death  benefits 
are  $50  to  $100.  The  Journeymen  Barbers  expend  for  a 
funeral  or  for  life  insurance  $60  to  $500.  The  funds  of  the 
Bakery  and  Confectionery  Workers  are  raised  by  monthly 
dues  of  50  cents  and  by  levying  occasional  assessments.  At 
the  death  of  a  member  the  widow  receives  $50  to  $150,  and 


96  INDUSTRIAL  INSURANCE 

at  the  death  of  the  wife  of  a  member  he  receives  $25,  $50, 
or  $75,  according  to  class.  The  weekly  dues  of  the  Brother- 
hood of  Leather  Workers  on  Horse  Goods  are  25  cents,  and 
twice  in  the  year  an  assessment  of  50  cents  is  levied;  the 
death  benefit  varies  between  $40  and  $100.  Local  lodges  of 
the  Federation  of  Musicians  pay  for  funeral  benefits  from 
$25  upward.  The  Hotel  and  Restaurant  Employees  and 
Bartenders  pay  5  cents  monthly  dues,  and  the  death  benefit 
is  $50  to  $100.  Between  February  23,  1903,  and  May  i, 
1905,  this  union  paid  out  $48,650  for  death  benefits.  The 
Tobacco  Workers'  Union  pays  $50,  and  the  Paving  Cutters' 
Union  $75.  Each  member  of  the  Boot  and  Shoe  Workmen 
pays  50  cents  into  the  fund  at  the  death  of  a  member.  The 
death  benefit  is  from  $50  to  $100.  In  the  year  1905  the 
expenditures  were  $16,175. 

The  union  of  cigarmakers  deserves  special  attention  in 
this  connection  because  its  organization  and  success  have 
been  so  remarkable.  This  union  was  founded  in  1864,  an<3 
its  insurance  scheme  was  introduced  in  1879.  Its  record  and 
statistical  reports  during  the  past  26  years  have  been  care- 
fully kept,  and  its  presentation  of  results  is  complete  and 
accurate.  Between  the  years  1865  and  1904  the  number  of 
members  rose  from  984  to  41,536.  The  union  is  built  up 
out  of  local  lodges,  all  of  which  recognize  the  international 
union  and  send  elected  delegates  to  the  general  conventions 
of  the  national  organization.  Even  the  officers  of  the  inter- 
national society  are  elected  by  a  majority  of  votes  of  mem- 
bers. Any  cigarmaker  may  belong  to  the  union,  with  the 
exception  of  Chinese  laborers  and  working  men  or  women 
in  tenement-house  shops.  An  applicant  for  membership  is 
received  upon  his  own  statement  after  payment  of  an 
entrance  fee.  Applicants  who  are  suffering  from  chronic 
diseases,  or  who  are  more  than  fifty  years  of  age,  may  be 
received  into  membership  and  pay  15  cents  weekly  dues, 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS         97 

but  are  not  entitled  to  sick  benefits  >nor  to  more  than  $50 
death  benefits.  Only  a  minority  of  cigarmakers  are  mem- 
bers of  the  union,  and  therefore  the  insurance  plan  does  \ 
not  protect  the  greater  number  engaged  in  this  trade.  The 
entrance  fee  is  $3,  which  may  be  paid  in  6  weekly  instal- 
ments. The  regular  dues  are  30  cents  a  week,  which  is 
paid  into  the  treasury  of  the  local  lodges.  A  member  may 
be  excused  from  payment  of  dues  for  16  weeks  of  unem- 
ployment, but  must  repay  the  amount  in  arrears  after  he 
secures  employment.  A  member  who  has  paid  dues  for  3 
years  can  receive  a  card,  by  means  of  which  he  is  authorized, 
by  paying  20  cents  weekly  dues,  to  retain  his  claim  to  sick 
and  death  benefits,  even  if  he  is  no  longer  in  the  trade.  The 
benefits  are  as  follows :  In  case  of  a  strike  or  lockout  the 
unemployed  workman  receives  during  the  first  16  weeks 
$5  per  week,  and  afterward  $3  per  week  until  employment 
is  resumed.  In  case  a  member  is  compelled  to  seek  work 
in  a  distant  place  he  may  obtain  an  advance  of  $8  to  $20  to 
cover  expenses  of  travel.  When  he  secures  employment 
he  must  begin  at  once  to  repay  the  loan  in  instalments  of  at 
least  10  per  cent,  of  the  amount.  A  member  who  for 
2  years  has  paid  his  dues  is  entitled  to  receive  during  unem- 
ployment $3  weekly  during  6  weeks;  after  a  suspension  of 
payment  for  7  weeks  he  may  again  receive  the  same  sum  for 
another  6  weeks.  Not  more  than  $54  in  one  year  may  thus 
be  received.  Every  regular  member  who  has  paid  his  dues 
for  an  entire  year  has  the  right  to  receive  $5  weekly  during 
the  time  of  disability  on  account  of  sickness.  During  the 
first  week  nothing  is  paid,  and  when  the  sickness  is  due  to 
drunkenness  or  vice  all  claim  is  forfeited.  Sick  benefits 
are  paid  only  upon  the  certificate  of  the  physician  that  the 
member  is  unable  to  work,  and  only  for  13  weeks  in  any  one 
year.  A  committee  of  the  lodge  visits  the  disabled  member 


INDUSTRIAL  INSURANCE 


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BENEFIT  FEATURES  OF  THE  TRADE  UNIONS         99 

in  his  home  and  establishes  the  fact  of  his  illness.  Women 
who  are  members  are  not  permitted  to  draw  sick  benefits 
3  weeks  before  and  5  weeks  after  confinement. 

Death  benefits  are  paid  after  the  death  of  a  member  who 
has  paid  dues  for  2  years  to  the  family  or  person  who  pro- 
vides for  the  funeral,  to  the  amount  of  $50  for  the  expenses 
of  burial;  but  the  entire  life  insurance  payable,  including 
this  $50,  is  fixed  by  classes,  according  to  the  period  during 
which  dues  have  been  paid:  (i)  members  of  5  years' 
standing,  $200;  (2)  members  of  10  years'  standing,  $350; 
(3)  members  of  15  years'  standing,  $550.  The  member 
may  designate  the  beneficiary  who  is  to  receive  the  death 
benefit.  A  member  may  receive  funeral  benefit  in  case  of 
the  death  of  wife,  or  mother  who  is  dependent  on  him.  A 
person  who  has  been  a  member  for  15  years  may  keep  his 
claim  to  death  benefit  alive  by  paying  monthly  dues  of  10 
cents,  by  quarterly  instalments,  after  he  has  become  disabled 
for  work. 

The  beginnings  of  invalid  insurance  are  found  in  this 
system.  A  member  who  has  become  blind,  or  who  has  lost 
both  hands,  is  entitled  to  receive  a  lump  sum  as  large  as  his 
family  might  receive  if  he  had  died  at  the  same  time.  Upon 
receiving  such  payment  the  person  loses  his  membership 
and  his  claims.  In  case  the  illness  or  death  is  caused  by 
military  service  the  benefit  is  not  paid;  nor  is  there  need, 
as  the  government  pension  then  makes  further  insurance 
unnecessary.  The  union  has  also  considered  and  worked 
out  a  plan  of  old-age  pensions;  and  it  is  thought  that  an 
addition  to  the  weekly  dues  of  10  cents  would  cover  the 
cost  of  such  insurance.  The  indemnity  for  the  loss  of  time 
through  unemployment  is,  as  already  explained,  frequently 
a  kind  of  old-age  pension;  because  most  of  the  members 
who  are  continuously  out  of  work  are  old  and  feeble,  and 


ioo  INDUSTRIAL  INSURANCE 

a  payment  of  $3  weekly  during  a  part  of  the  year  prevents 
the  necessity  of  appealing  to  public  or  private  charity.2 

Mr.  A.  M.  Sakolski  has  described  the  organization  and 
activities  of  the  strong  Iron  Moulders'  Union  of  North 
America  with  great  care,  and  has  given  an  excellent  account 
of  its  development  and  administration.  This  union  was 
organized  in  the  year  1859.  Before  1895  its  sick-benefit 
department  was  left  entirely  with  the  local  unions,  and  the 
administration  in  some  of  the  lodges  was  quite  successful. 
But  this  form  of  organization,  natural  in  primitive  stages 
of  growth,  proved  to  be  unsatisfactory.  In  a  country  like 
the  United  States,  where  the  workmen  either  voluntarily 
or  necessarily  move  very  much  from  place  to  place,  the  local 
system  is  found  to  work  badly;  a  member  who  goes  into  a 
new  city  may  find  himself  in  need  of  help  during  the  first 
weeks  of  his  stay,  and  he  may  not  have  acquired  right  to 
relief  at  that  moment,  or  there  may  be  no  lodge  with  sick- 
relief  features  in  his  new  home.  The  General  Convention 
in  i8953  adopted  a  rule  according  to  which  any  member 
disabled  by  accident  or  sickness  may  receive  a  weekly  bene- 
fit of  $5  after  the  first  week  and  during  13  weeks.  A 
member  who  has  paid  dues  for  6  consecutive  weeks  and  is 
not  in  debt  for  dues  of  more  than  13  weeks  has  claim  upon 
this  relief.  The  weekly  dues  are  25  cents,  out  of  which 
amount  the  local  lodge  retains  8  cents  on  deposit,  and  trans- 
mits the  remainder  to  the  national  treasury  to  cover  costs 
of  strikes  and  of  administration.  Any  surplus  of  the  local 
treasury  is  sent  to  the  national  treasury,  and  from  the 
central  fund  relief  is  given  to  local  lodges  which  may  be 

2  REFERENCES  :  Constitution  of  the  Cigarmakers'  Union,  i4th  edition. 
Report  of  1906 ;  Helen  L.  Summer,  in  Trade  Unionism  and  Labor  Prob- 
lems, John  R.  Commons,  editor,  p.  527 ;  Report  of  Industrial  Commission, 
Vol.  XVII,  p.  280;  Cigarmakers'  Official  Journal;  Hollander  and  Barnett, 
Studies  in  American  Trade  Unionism,  p.  66. 

8  Constitution  and  Rules,  Art.  17,  sec.  i. 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       101 


unable  to  meet  extraordinary  claims  on  the  sick  fund.  Thus 
each  lodge  has  behind  it  the  strength  of  the  entire  national 
body.  The  system  has  worked  admirably.  Since  the  first 
of  January,  1896,  at  which  date  sick  insurance  was  first 
introduced,  the  expenditures  have  been  as  shown  in  the 
table  : 

TABLE  II 


Year 

Membership 

Sick  Benefits 

1806 

20,920 

$  38,510.00 

j.uyw.       . 

1897  
l898  

1899  

I9OO 

23,003 
25,072 
28,941 
4.1,180 

36,720.00 
37,710.00 

57,495  -oo 
102,936.  oo 

I9OI 

48,  11^ 

118,51";.  oo 

IOO2 

<4,2^I 

134,116.00 

IQO3 

64,472 

179,3  5  5.00 

IOO4. 

76,416 

193,214.  25 

One  part  of  the  experiment  is  so  important  and  sig- 
nificant that  it  deserves  special  remark.  The  winter  of  1904 
was  very  cold,  and  the  iron  industry  was  temporarily  de- 
pressed. The  number  of  members  who  resorted  to  the  sick 
benefit  fund  for  relief  was  unusually  large.  The  official 
organ  of  the  union4  explained  this  fact  by  saying  that  these 
payments  were  more  generally  due  to  unemployment  than 
to  actual  illness  which  incapacitated  members  for  work,  and 
that  it  was  a  consequence  of  the  depression  in  the  industry. 
It  is  possible  that  idleness  may  cause  sickness  in  many 
instances,  though  this  subject  has  not  been  thoroughly 
studied. 

The  provisions  for  unemployment  are  worthy  of  men- 
tion. The  actual  cost  of  the  sick  insurance  is  about  6  cents 
per  member  per  week  for  the  entire  membership  of  the 
national  union,  the  benefit  being  $5  per  week.  The  weekly 
dues  of  8  cents  per  member  therefore  leave  a  surplus  in  the 
national  treasury.  In  1897  the  general  convention  voted 

*  Journal,  August,  1904,  p.  590. 


102 


INDUSTRIAL  INSURANCE 


to  set  apart  i  cent  of  this  surplus  from  the  dues  to  pay  the 
dues  of  members  who  happen  to  be  out  of  work.  Between 
the  year  1897  (October  i)  to  the  end  of  1900  the  total 
expenditures,  for  dues  of  unemployed  members  amounted 
to  the  sum  of  $6,577.38,  from  which  fact  it  is  apparent  that 
fewer  than  500  members  were  unemployed.  Since  the  year 
1900  conditions  have  been  even  more  favorable.  Yet  a 
few  years  of  industrial  depression  would  exhaust  a  very 
large  reserve  fund. 

The  union  provides  life  insurance,  and  indemnity  in" 
case  of  total  disability.  The  death  benefits  and  the  indemni- 
ties for  total  disability  vary  with  the  duration  of  member- 
ship in  the  union.  A  member  who  has  paid  dues  during 
5  to  10  years  is  able  to  claim  a  death  benefit  or  indemnity 
for  total  disability  of  $150.  When  membership  has  con- 
tinued for  10  to  15  years  the  sum  is  fixed  at  $175,  and  after 
15  years  at  $200.  The  monthly  dues  for  this  fund  are  6.4 
cents  per  member,  and  deficits  are  avoided  by  devoting  to 
this  fund  the  entrance  fees  of  new  members,  $2  each. 

TABLE  III 


Years 

Receipts 

Expenditures 

Monthly  Dues 

1880-82 

$16  ^07   OO 

$I2,OOO  OO 

$O  07    1—2 

1882-86                  .    .    . 

12  420   Q2 

32  4OO  OO 

O  07    1—2 

1886-88         ..... 

22  182    OI 

16,^^0  so 

O.  IO 

1888-90  

20,088.  oc 

21,010    OO 

O.o8 

1800—0? 

£4,170    10 

^8,<I2.QO 

0.64 

1895-99  
1899-02  

D^/y-  Av 

54,631.56 

111,916.  13 

40,499.00 

75>63J  -36 

0.64     (and  $2  en- 
o  .  64      trance  fee) 

The  expenditures  for  strikes  during  the  3  years  1899- 
1902  were  $111,571.22;  for  the  organization  of  new  local 
unions  and  the  general  work  of  propagandism,  $16,000 
annually ;  for  the  expenses  of  the  general  convention  in  the 
year  1902,  $50,670.72.  The  general  convention  meets  once 
in  three  years.  The  financier  of  the  national  union  receives 
from  the  local  secretaries  monthly  reports  containing  the 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       103 

names  of  all  contributing  members,  the  amount  of  each 
payment  for  sick  benefits,  and  the  condition  of  the  treasury. 
The  account  of  each  member  is  kept  on  a  separate  card. 
A  physician  is  appointed  to  examine  the  applicant  and  give 
a  certificate — a  measure  employed  to  assure  the  union  that 
deception  is  not  practiced.  In  order  to  insure  the  funds 
against  fraud,  all  officials  intrusted  with  handling  funds 
must  give  bonds  which  cover  the  risk  to  the  organization. 
The  union  was  driven  to  adopt  these  measures  because  it 
had  learned,  by  the  bitter  experience  with  dishonest  officials 
in  former  years,  that  they  are  necessary.  The  method  of 
keeping  accounts  is  uniform  in  all  lodges,  and  the  national 
office  supervises  and  controls  the  entire  proceeding.  Dur- 
ing the  year  1904  the  Iron  Moulders'  Union  paid  for  strikes 
$266,283.43;  sick  benefits,  $198,214.25;  death  benefits  and 
indemnity  for  total  disability,  $53,786.40;  costs  of  adminis- 
tration, $74,586.97;  entire  expenditures,  $592,871.05. 

In  general  we  may  cite  the  expression  of  Mr.  Samuel 
Gompers  as  typical  of  the  convictions  of  the  leaders  of  the 
unions  affiliated  with  the  American  Federation  of  Labor. 
He  said  substantially  that  he  deemed  it  his  duty  to  urge  upon 
the  unions  to  make  themselves  useful  to  the  members,  not 
only  in  securing  higher  wages  and  better  conditions  of  hours 
and  work-places,  but  also  by  furnishing  relief  in  times  of 
distress  of  members.  The  first  condition  of  such  a  measure 
would  be  that  the  dues  should  be  increased.  There  is  no 
good  reason  why  the  union  should  not,  in  addition  to  pro- 
tection of  trade  interests,  secure  to  the  workers  support  in 
time  of  sickness,  unemployment,  old  age,  and  invalidism.5 

Unions  of  the  railroad  employees. — These  unions  do  not 
belong  to  the  American  Federation  of  Labor.  There  are 

5  Quoted  from  a  speech  in  1905  in  Die  bestehenden  Einrichtungen  zur 
Versicherung  gegen  die  Folgen  der  Arbeitslosigkeit  im  Ausland  und  im 
Deutschen  Reich,  Part  I,  p.  357. 


104 


INDUSTRIAL  INSURANCE 


seven  of  these  brotherhoods,  of  which  five  consist  of  work- 
men engaged  directly  in  the  dangerous  labors  of  train  ser- 
vice. The  following  table  presents  a  summary  of  the  facts 
relating  to  these  organizations : 

TABLE  IV 


Organization 

Membership 

Payments  (1905) 

Number  of  Payments 

Conductors               

1.6  OOO 

$    825  OOO 

4.2? 

Engineers       

47  OOO 

I  327  SOO 

CQ4. 

Firemen      

^,287 

810  2^0 

Switchmen     

23.OOO 

IZA..2OO 

icrj 

Brakemen  

Mr™ 

I,Z4.Z,21.6 

5    . 
1,1^4* 

Total 

2?e  826 

$4  662  186 

*  The  number  of  payments  by  the  brakemen  is  one-half  the  total  for  the  two  years  1903 
and  1904. 

From  the  year  1868  to  1905  the  Locomotive  Engineers' 
Mutual  Life  and  Accident  Insurance  Association  paid  out 
for  6,232  cases  of  relief  the  sum  of  $14,983,038.71.  The 
employees  of  the  railroad  corporations  which  have  estab- 
lished relief  departments  must  not  only  pay  their  dues  to 
the  relief  departments,  but  also  to  their  brotherhood  funds 
for  sick  and  accident  benefits.  Fortunately  their  wages 
are  relatively  high,  and  they  are  generally  able  to  provide 
this  double  insurance.  But  they  frequently  complain  that 
the  companies  throw  on  the  employees  an  excessive  burden 
of  cost  in  the  relief  departments.  Mr.  J.  B.  Kennedy  has 
recently  made  a  careful  study  of  the  insurance  funds  of 
these  railroad  unions,  and  from  his  account  the  most  im- 
portant facts  may  be  obtained.6 

The  number  of  railroad  employees  in  the  United  States 
is  estimated  to  be  over  1,000,000  persons,  and  one-sixteenth 
of  the  population  depends  on  them  for  support.  Over  300,- 
ooo  of  these  workmen  are  members  of  trade-unions  which 
offer  sickness  and  accident  and  death  benefits.  There  are 


8  Hollander  and  Bennett,  Studies  in  American  Trade  Unionism    (1905), 
P.  323- 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       105 

two  noteworthy  characteristics  of  these  railroad  unions: 
the  members  are  workmen  in  a  particular  occupation  of 
railroad  service,  and  any  member  is  entitled  to  change  from 
one  company  to  another  without  losing  his  claims  in  his 
union. 

The  Grand  Brotherhood  of  Locomotive  Engineers,  at 
first  called  Brotherhood  of  the  Footboard,  was  founded 
August  17,  1863.  In  the  year  1890  the  number  of  members 
was  8,000.  In  1904  the  number  had  reached  46,400,  and 
the  local  lodges  numbered  652.  Since  January  i,  1890,  all 
members  under  50  years  of  age  must  be  inscribed  in  the 
insurance  department  of  the  union  as  a  condition  of  mem- 
bership. 

The  Order  of  Railway  Conductors  was  founded  July  6, 
1868.  In  the  year  1891  all  members  were  obliged  to  belong 
to  the  insurance  department,  and  from  that  time  forward 
the  union  grew  rapidly.  On  December  31,  1903,  the  num- 
ber of  policies  in  force  was  27,875,  and  since  the  union  was 
founded  $6,329,067  have  been  expended. 

The  Brotherhood  of  Locomotive  Firemen  was  founded 
December  i,  1873,  an(^  in  ^78  membership  in  the  insurance 
department  was  made  obligatory  for  all  members  of  the 
union.  In  1904,  98.59  per  cent,  of  all  members  were  in- 
sured, and  the  policies  in  force  had  a  value  of  $75,559,000. 
Since  its  foundation  the  union  has  expended  $7,941,065 
in  indemnities  and  life  insurance. 

The  Brotherhood  of  Railroad  Trainmen,  at  first  called 
Brotherhood  of  Railroad  Brakemen,  was  organized  Septem- 
ber 23,  1883.  In  the  year  1903,  95.55  per  cent,  of  all 
members  held  life-insurance  policies.  Up  to  April  i,  1904, 
the  union  had  paid  $8,987,284.54  indemnities  and  death 
benefits.  The  New  York  Bulletin  of  Labor  for  1906  gives 
the  later  figures,  $10,491,101.20. 

The  Order  of   Railroad   Telegraphers  was  organized 


io6  INDUSTRIAL  INSURANCE 

June  9,  1886,  and  in  1898  insurance  was  made  obligatory 
on  all  members.  Twelve  monthly  payments  of  20,  30,  or 
60  cents  are  required,  according  to  class,  and  the  death 
benefits  paid  vary  from  $300  to  $500  and  $1,000.  The 
mortuary  fund  remains  intact  and  cannot  be  used  for  other 
purposes,  and  on  November  30,  1905,  it  amounted  to  $126,- 
730. 16 — a  recognition  of  the  need  of  a  reserve  fund  to  meet 
the  claims.  The  entire  expenditures  up  to  December  i, 
1904,  were  $170,450. 

The  Switchmen's  Union,  at  first  under  the  name  Switch- 
men's Mutual  Aid  Association,  was  organized  in  1886.  In 
1901  the  statutes  of  the  union  made  insurance  obligatory 
on  all  members.  At  the  end  of  the  year  1903  the  policies 
had  a  face  value  of  $6,679,200,  and  the  expenditures  since 
organization  had  been  $207,336.75. 

The  International  Brotherhood  of  Maintenance-of-Way 
Employees  was  organized  in  1887.  Insurance  in  the  union 
fund  is  at  present  voluntary,  although  it  was  formerly 
obligatory.  Many  of  the  members  who  held  life-insurance 
policies  in  ordinary  companies,  and  who  had  some  doubts 
on  account  of  the  uncertainty  about  assessments,  induced 
the  general  convention  in  1896  to  recede  from  the  former 
position  favoring  compulsory  membership  in  the  life-insur- 
ance fund.  Up  to  the  year  1903  the  fund  had  expended  in 
relief  $150,000.  On  January  i,  1904,  the  number  of  mem- 
bers was  40,000. 

All  these  unions  distinguish  between  the  funds  for  death 
benefits  and  indemnities  for  disability,  which  are  managed 
by  the  national  organization,  and  the  sick  and  accident 
insurance  which  is  carried  by  the  local  lodges.  The  by-laws 
of  the  Conductors'  Union  in  the  year  1868  prohibited  the 
local  lodges  from  administering  death  benefits  and  indemni- 
ties for  disability,  on  the  ground  that  this  would  weaken 
the  national  society.  The  Locomotive  Engineers  followed 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       107 


the  example  of  the  conductors  in  1869  and  established 
similar  regulations.  The  national  association  makes  the 
rules  for  the  management  of  the  local  funds  for  sickness 
and  accident  insurance.  In  consequence  of  improved  condi- 
tions and  administration,  the  number  of  claims  on  the  dis- 
ability fund  has  gradually  diminished.  The  employees  on 
railroads  regard  the  disability  insurance  as  very  important 
on  account  of  the  liability  to  injury  in  their  occupation. 

TABLE  V 


NUMBER  < 

)F  CLAIMS 

PER  CENT. 
OF  CLAIMS 

CLAIMS  FOR 
DISABILITY 

PERIOD 

Death 

Disability 

FOR 

DISABILITY 

PER  I.OOO 

MEMBERS 

Conductors  
Firemen 

1893-94 
1895-96 
1897-98 
1899-00 
1901-02 
1903-04 

1804.—  06 

265 
274 
363 

440 

523 
688 

20  c 

49 
46 

63 

55 
81 

92 

IdC 

15-6 
14-3 
14.8 
II.  I 

13-4 
n.  8 

•?  2    O 

3-8 

y 

2.6 

3-2 
3-° 

6  o 

1896-98 
1898-00 
1900-02 
1902-04 

349 
488 

655 
857 

118 
174 
186 
234 

25-3 
26.3 
22.  I 
21.4 

4-3 
4-7 
3-9 
4-3 

Total  disability  has  been  defined  in  the  by-laws  and 
practice  of  these  unions  of  railroad  employees  in  a  specific 
sense,  and  it  is  made  to  include  only  incapacity  to  work  at 
the  usual  occupation.  In  1898  the  rules  of  the  engineers 
had  described  total  disability  as  the  loss  of  a  hand  at  or 
above  the  wrist,  or  the  loss  of  a  foot  at  or  above  the  ankle, 
or  the  loss,  complete  and  permanent,  of  the  sight  of  an  eye 
or  of  both  eyes;  and  provided  in  such  cases  that  the  member 
should  receive  the  entire  amount  of  the  face  of  the  policy, 
the  same  as  in  case  of  death.  The  by-laws  of  the  conductors 
recognize  loss  of  hearing,  if  it  amounts  to  total  deafness,  as 
total  disability.  The  regulations  of  the  switchmen  go 
farther  and  add  the  loss  of  four  fingers  of  one  hand  at  or 
above  the  second  joint,  or  of  three  fingers  and  a  thumb  on 


io8  INDUSTRIAL  INSURANCE 

one  hand  at  or  above  the  second  joint.  These  conditions 
are  more  liberal  and  explicit  than  those  of  the  policies  custo- 
mary with  the  ordinary  casualty  companies,  which  add  limi- 
tations and  conditions  which  impair  the  value  of  the  policy 
for  men  in  such  occupations.  The  rules  as  described  are 
more  satisfactory  and  involve  smaller  cost.  It  is  probable 
that  members  of  a  union  do  not  require  the  same  exacting 
restrictions  as  the  customers  of  a  corporation  engaged  in 
the  insurance  business,  because  the  comrades  of  a  wounded 
man  will  know  whether  he  is  deceiving  the  union  or  not, 
and  a  private  company  has  not  this  protection.  If  a  member 
desires  to  buy  accident  or  sickness  insurance,  he  can  do  so 
through  the  local  lodge.  The  telegraph  operators  have  not 
thought  it  desirable  to  establish  accident  insurance,  because 
their  employment  is  not  specially  hazardous.  Not  without 
unfortunate  experiences  and  mishaps  have  the  unions  devel- 
oped their  systems  of  insurance  during  the  early  experi- 
mental years,  1886  to  1880.  Since  1880  the  methods  have 
been  comparatively  uniform  and  efficient.  During  the  early 
years  of  the  life  of  the  unions  the  benefits  were  very  fluctu- 
ating and  uncertain  in  amount,  depending  on  the  accident 
of  the  state  of  the  treasury;  but  since  the  revision  of  the 
regulations  the  indemnity  in  case  of  total  disability  and  the 
death  benefits  have  been  fixed  and  stable.  During  the  years 
1890  to  1900  the  principle  has  gradually  been  established 
that  the  benefits  should  be  diminished  with  advancing  years, 
the  premiums  remaining  the  same ;  while  in  ordinary  insur- 
ance companies  the  premiums  change  according  to  the  age 
of  the  insured. 

Table  VI  shows  the  amounts  received  in  each  union 
according  to  the  age  classes. 

In  former  years  the  death  benefits  and  indemnities  for 
total  disability  were  raised  by  assessments  upon  the  mem- 
bers after  the  accident  happened;  but  now  all  the  brother- 
hoods, with  the  exception  of  the  engineers,  maintain  reserve 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       109 
TABLE  VI 


Union 

Age  Class 

Amount  of  Policy 

Locomotive  engineers  
Conductors 

Under  40 
40-45 
45-50 

Under  3  <\ 

$4,500 
3,000 
1,500 

3OOO 

Firemen 

35-45 
45-50 

Under  45 

2,000 

1,000 
3,000 

Trainmen  

Over     45 
No  age  classes 

I.2CO 

Telegraph  operators  

18-45; 

I,OOO 

Switchmen 

45-5° 
50-60 

No  age  classes 

500 
I  2OO 

Trackmen*   . 

I  OOO 

*  Only  exceptionally  does  this  union  pay  policies  according  to  age  class. 

funds  to  cover  the  expenditures  for  claims  as  they  arise. 
The  premiums  must  be  fixed  in  each  organization  according 
to  the  wages  of  the  members,  taking  into  account  also  the 
indemnities  they  desire  to  secure  and  the  number  of  claims. 
The  expenditures  have  steadily  increased.  Among  the 
locomotive  engineers,  the  conductors,  and  the  firemen,  the 
policies  of  $1,500  are  preferred.  Step  by  step,  since  the 
firemen  in  1878  introduced  the  requirement,  has  insurance 
of  all  members  been  made  obligatory.  Is  not  this  a  proof 
that  the  tendency  of  all  industrial  insurance  is  toward  com- 
pulsory insurance?  In  all  unions  there  are  non-beneficiary 
members  who  are  not  admitted  to  the  insurance  privileges 
because  they  are  disabled  from  employment  or  have  become 
old.  The  cost  of  life  insurance  per  $1,000  varies  in  the 
brotherhoods  :7 

Engineers,    Dec.   31,    1903 $17.80 

Conductors,  Dec.  31,  1903 16.00 

7  Hollander  and  Barnett,  op.  cit.,  p.  343. 


110  INDUSTRIAL  INSURANCE 

Firemen,  June  30,   1904 12.00 

Trainmen,   Dec.  31,   1903 18.00  (or  $17.78) 

Telegraph    operators,   Dec.   31,    1903 7.20 

Switchmen,  Dec.  31,  1903 20.00 

Trackmen,  Dec.  31,  1003 12.00   (or  $15  and  $18  by  class) 

The  corresponding  premiums  in  ordinary  casualty  insur- 
ance companies  would  be  in  the  age  class  of  35  years,  per 
$1,000  of  insurance:  locomotive  engineers,  $27.23,  and  the 
same  for  firemen,  trainmen,  switchmen,  and  trackmen;  for 
conductors  and  telegraph  operators,  $22.23  5  or  about  30 
per  cent,  higher  for  death  benefits  alone ;  while  the  brother- 
hoods also  guarantee  benefits  of  equal  amounts  for  total 
disability.  It  is  observed  that  the  premiums  vary  in  the 
different  unions  according  to  the  degrees  of  risk.  Thus  the 
premiums  for  the  telegraph  operators  are  relatively  low 
because  they  are  not  exposed  to  unusual  dangers  in  their 
occupation.  The  firemen  pay  a  lower  premium  because  they 
are  young,  and  when  they  become  older  they  pass  up  into 
the  ranks  and  society  of  the  engineers.  Among  the  switch- 
men advancement  is  not  so  frequent;  there  are  no  age 
limits  of  membership,  and  therefore  the  rates  are  relatively 
high. 

As  a  rule,  the  unions  require  their  grand  master  and 
grand  secretary  to  give  bond  for  the  security  of  funds 
managed  in  the  sum  of  $10,000  to  $100,000.  The  funds 
of  the  insurance  departments  are  kept  separate  from  other 
funds  of  the  unions,  and  a  separate  assessment  is  levied  for 
the  support  of  these  funds.  Regulations  have  been  passed 
to  prevent  the  use  of  insurance  funds  for  other  purposes. 
State  laws  also  govern  the  management  of  regular  insurance 
companies,  and  these  funds  come  under  state  supervision, 
by  insurance  commissioners — a  further  security  that  they 
will  not  be  scattered  for  strikes  or  other  alien  objects.  In 
this  way  one  of  the  weaknesses  of  trade-union  insurance 


BENEFIT  FEATURES  OF  THE  TRADE  UNIONS       ill 

is  removed,  for  the  entire  scheme  is  rendered  unstable  if 
money  paid  for  benefit  funds  may  be  diverted  by  action  of 
officers,  or  even  by  vote  of  the  representative  conventions. 
In  the  future  development  of  industrial  insurance  we 
must  reckon  with  the  trade-unions  as  among  the  most  im- 
portant agencies  for  promoting  the  movement,  especially 
as  legal  compulsion  seems  to  be  remote.  The  stronger 
unions  have  long  since  learned  that  an  insurance  fund  is 
the  first,  most  sure,  and  most  permanent  foundation  for  the 
popularity  of  the  union.  Only  in  extraordinary,  uncertain, 
and  unforeseen  circumstances  is  a  strike  fund  needed,  while, 
on  the  contrary,  provision  of  benefits  in  cases  of  sickness, 
accident,  and  death  is  a  permanent  and  certain  need  of 
members.  If  compulsory  insurance  were  introduced,  the 
legislatures  of  the  states  would  find  it  desirable  and  neces- 
sary to  bring  these  powerful  organizations  into  the  system 
by  recognizing,  regulating,  and  controlling  their  by-laws 
and  administration.  The  state  governments  could  well 
afford  to  follow  this  course,  because  the  unions  have  shown 
that  they  can  administer  insurance  funds  at  low  cost  and  in 
an  efficient  and  satisfactory  way.  Up  to  this  time  the  trade- 
unions  are  the  only  organizations  which  have  shown  ability, 
even  in  moderate  measure,  to  provide  unemployment 
insurance. 


CHAPTER  IV 
THE    INSURANCE    OF    THE    FRATERNAL    SOCIETIES 

These  societies  of  the  United  States  are  similar  in  many 
respects  to  the  friendly  societies  of  Great  Britain,  but  they 
are  not  confined,  as  in  the  mother  country  with  its  established 
social  distinctions,  to  the  so-called  working  classes.  Indeed 
there  is  a  strong  inducement  for  professional  persons,  es- 
pecially those  who  seek  clients  or  votes,  to  belong  to  one  or 
more  strong  fraternal  associations  for  the  acquaintance  and 
influence  which  membership  gives. 

The  characteristics  which  distinguish  these  brotherhoods 
are  the  following :  ( i )  Each  local  lodge  belongs  to  a  system 
of  similar  lodges  with  common  regulations.  (2)  Each 
lodge  is  an  independent  society  for  local  purposes,  and  yet 
the  rules  which  govern  it  are  made  by  a  legislative  body 
composed  of  delegated  representatives  elected  by  the  lodges, 
and  there  is  a  central  administration  by  officials  chosen  by 
the  federation.  (3)  Each  fraternal  organization  has  its 
own  peculiar  ceremonies,  usually  of  a  religious  character, 
which  gives  expression  to  the  sympathetic  bonds  of  the 
members.  The  secret  pass-words  and  signs  and  solemn 
forms  of  initiation  provoke  curiosity  and  attract  new  mem- 
bers. (4)  Brotherly  assistance  is  rendered  to  sick  or  help- 
less members.  Many  of  the  services  rendered  by  a  lodge  to 
its  members  could  not  be  formally  prescribed  in  a  contract 
nor  reported  in  statistical  tables,  (5)  All  lodges  pay  some- 
thing or  render  some  form  of  aid  to  members  who  are 
wholly  or  partially  unable  to  work.  (6)  Death  benefits  are 
paid  to  the  bereaved  family  of  a  member  who  has  died,  or 
to  his  legal  heirs.  It  is  in  this  last  point  that  the  fraternal 

112 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     113 

societies  discover  their  chief  social  function,  and  it  is  this 
fact  which  makes  them  competitors  of  the  ordinary  insur- 
ance companies  which  carry  on  business  for  profit.  The 
strife  between  them  is  unceasing  and  often  bitter,  even  if 
veiled  under  formal  courtesy.  If  the  financial  basis  of  a 
fraternal  society  is  sound  it  can  continue  to  exist,  even  when 
the  ceremonies  and  sociable  features  are  lightly  esteemed 
and  are  neglected;  but  if  the  administration  is  defective, 
the  assessments  unduly  frequent  and  high,  the  economic 
burden  excessive,  then  the  society  goes  to  the  wall  in 
spite  of  all  its  sentimental  sympathies  and  its  impressive 
ritual.1 

It  is  not  easy  to  discover  how  large  a  proportion  of  the 
members  of  these  fraternal  societies  belong  to  the  wage- 
earning  group.  Statistical  material  for  a  judgment  is  want- 
ing and  the  opinions  of  representative  leaders  vary  according 
to  their  personal  experience  and  observation.  In  some  lodges 
the  workingmen  are  more  numerous  than  in  others.  In- 
quiries made  among  almoners  of  charity,  friendly  visitors, 
residents  of  settlements,  collectors  for  the  "industrial  insur- 
ance companies,"  and  officials  of  the  fraternal  societies 
themselves  furnish  evidence  that  the  unskilled  and  low-paid 
workingmen  do  not  constitute  any  large  part  of  the  mem- 
bership, but  that  these  are  more  likely  to  purchase,  at  high 
rates,  a  little  claim  on  burial  benefits  from  the  industrial 
companies  and  to  secure  an  imperfect  provision  for  sick- 
ness in  some  club  or  mutual  aid  society  with  small  dues. 
In  the  larger  cities  and  in  certain  smaller  industrial 
centers  it  is  probable  that  the  Catholic  fraternal  orders 
consist  almost  entirely  of  wage  earners.  The  most  im- 
portant single  investigation,  so  far  as  known  to  the 

1  Proceedings  of  the  Nineteenth  Annual  Meeting  of  the  National  Fra- 
ternal Congress,  p.  445. 


114 


INDUSTRIAL  INSURANCE 


writer,  is  that  of  the  Bureau  of  Labor  Statistics  of  Con- 
necticut.2 

Activity  of  the  fraternal  societies? — In  the  year  1905 
there  were  said  to  be  168  societies  of  the  kind  under  con- 
sideration in  the  United  States.  The  first  to  be  established 
dated  from  October  i,  1868,  the  youngest  from  September 
30,  1904.  How  many  in  the  meantime  have  dissolved  it  is 
difficult  to  discover.  On  January  i,  1905,  there  were  87,- 
758  lodges  with  a  total  membership  of  5,111,480  persons, 
of  whom  232,068  were  "social  members"  who  had  no  claim 
upon  the  life-insurance  benefits  of  the  lodges,  while  the 
great  majority  (4,879,412)  were  in  the  full  enjoyment  of 
these  rights.  During  the  year  1904  the  number  of  lodges 
increased  about  3,860,  and  the  membership  137,049,  and 
yet  this  very  year  was  for  all  forms  of  life  insurance 
organizations  in  the  United  States  a  year  of  unrest,  sus- 
picion, and  difficulties.  The  insurance  in  force,  at  least  on 
the  face  of  contracts,  was  on  January  i,  1905,  $6,665,- 
141,251.  The  expenditures  during  the  year  1904  were 
$64,322,892.  The  assets  on  January  i,  1905,  were  stated 
to  be  $51,465,430,  and  the  liabilities  $9,619,089.  The 
total  expenditures  of  all  fraternal  societies  since  their 
foundation,  chiefly  for  death  benefits,  had  been  $787,427,- 
445;  and  in  addition  to  this  13  societies  which  offer  sick 

2  Report  of  Bureau  of  Labor  Statistics  of  Connecticut,  1891;  Article 
of  E.  W.  Bemis  in  Universal  Cyclopedia,  Vol.  IV,  p.  521  : 


Occupations 

Societies  with 
Branches  —  Per  cent. 

Societies  without 
Branches  —  Per  cent. 

In  business  

21  .  l6 

In  professions  
Well-paid  mechanics  
Lower  paid  mechanics  
Clerks 

5-33 
38-65 
20.28 

14.74 
27-37 
6.35 

Farmers  
Housewives  

0.66 
2.72 

Total  per  cent 

3  Statistics  of  Fraternal  Societies,  1905,  Rochester,  N.  Y. 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     115 

insurance  had  paid  out  for  this  purpose  $312,514,193.  The 
total  expenditures  of  all  societies  for  all  purposes  had  been 
since  their  beginning  $i,O99,94i,638.4 

Costs  of  administration.-£lt  is  the  boast  of  the  fraternal 
orders  that  their  expenses  of  administration  have  been  kept 
remarkably  low. ;  A  comparison  has  been  drawn  between 
twenty-five  of  the  most  important  insurance  corporations 
with  twenty-five  of  the  largest  fraternals.  The  policies  of 
the  twenty-five  insurance  companies  had  a  value,  on  Decem- 
ber 31,  1904,  of  $8,541,899,611,  while  the  smaller  but  more 
numerous  policies  of  the  fraternals  had  a  face  value  of  $5,- 
210,016,008.  The  costs  of  administration  of  the  twenty-five 
insurance  companies  was  18.3  per  cent,  of  the  receipts, 
while  the  corresponding  costs  of  the  fraternals  amounted  to 
only  8.4  per  cent.  The  representatives  of  the  fraternals 
offer  an  explanation  of  the  difference.  In  the  first  place  the 
salaries  of  the  officers  of  the  fraternals  are  very  low,  while 
those  of  officials  of  the  great  companies  are,  in  many  cases, 
notoriously  extravagant.  In  the  case  of  the  companies 
every  policy  holder  has  been  won  at  considerable  expense 
for  commissions  of  solicitors,  while  in  the  lodges  members 
are  solicitors  who  work  zealously  without  pay.  Further  the 
meetings  of  the  lodges  afford  a  method  of  collecting  the 
premiums  and  dues  without  great  expense. 

National  organisations. — The  fraternal  societies  have 

4  A  national  fraternal  sanatorium  association  has  been  formed  to  pro- 
vide for  the  treatment  of  members  afflicted  with  tuberculosis.  They  have 
secured  property  in  New  Mexico  valued  at  $1,000,000,  and  an  effort  is 
made  to  endow  and  support  it.  The  National  Fraternal  Congress  and  the 
Associated  Fraternities  of  America  have  voted  approval  of  the  enter- 
prise. It  is  affirmed  that  over  $9,000,000  were  paid  out  in  one  year  for 
those  who  had  died  of  consumption,  and  it  is  believed  that  by  curing  and 
preventing  the  disease  the  cost  of  sick  benefits  and  premiums  for  life 
insurance  can  be  substantially  reduced.  The  cost  for  caring  for  patients 
will  be  from  $7  to  $10  per  week.  The  legislature  of  Illinois,  in  1907, 
made  it  legal  for  fraternal  societies  to  establish  and  maintain  such 
sanatoria. 


Ii6  INDUSTRIAL  INSURANCE 

federated  themselves  in  two  large  groups  called  the  National 
Fraternal  Congress  and  the  Associated  Fraternities  of 
America.  The  purpose  of  these  federations  is  to  discuss 
the  common  interests  of  the  lodges,  to  explain  the  technical 
problems  of  insurance,  and  to  influence  legislation.  The 
Catholic  fraternal  benefit  societies  follow  the  same  economic 
principles  as  the  others,  as  explained  above,  and  their  statis- 
tics are  included  with  those  of  other  similar  organizations. 
Naturally  their  members  are  of  the  Catholic  church  and 
many  of  the  priests  are  very  active  in  promoting  the  societies 
in  their  parishes.  These  Catholic  orders  have  paid  out 
during  the  past  twenty-five  years  over  $65,000,000  in  death 
and  sickness  benefits,  and  they  have  now  over  400,000 
members. 

Objections  and  criticisms. — The  fraternal  benefit  socie- 
ties are  severely  criticised  by  actuaries  and  insurance 
specialists  in  the  United  States,  especially  in  cases  where 
our  societies  have  refused*  to  learn  from  the  history  of  the 
older  English  friendly  societies  and  to  reform  their  plans  in 
accordance  with  experience.  The  more  familiar  criticisms 
are  the  following :  The  premiums  of  the  older  members  are 
in  comparison  with  those  of  younger  members  relatively  too 
low  to  cover  the  risk,  and  therefore  the  younger  members 
must  carry  more  than  their  share  of  the  burden.  Ordinarily 
the  f raternals  have  declined  to  provide  reserve  funds  or  have 
very  inadequate  reserves,  and  so  the  benefits  must  be  paid 
out  of  assessments  levied  at  or  near  the  time  of  ripened 
claims.  In  consequence  of  these  defects  the  rates  of  assess- 
ments rise  gradually,  and  therefore  the  younger  members, 
who  must  carry  more  than  their  proper  share  of  the  cost, 
fall  away  from  membership,  only  older  members  remain; 
the  burden  becomes  unbearable,  and  the  brotherhood  be- 
comes bankrupt,  unable  to  fulfil  its  promises  or  at  least 
the  expectations  of  the  members.  Once  the  older  men  are 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     117 

out  of  a  fraternal  society  they  find  themselves  too  far 
advanced  in  years  to  buy  insurance  in  regular  companies, 
or  the  rates  are  so  high  as  to  be  prohibitive.  Furthermore, 
it  is  claimed  by  the  representatives  of  the  ordinary  insur- 
ance companies  that  the  salaries  of  the  officials  are  so  low 
that  competent  and  skilful  men  will  not  accept  the  respon- 
sible administrative  offices,  and  that,  under  imperfect  man- 
agement, the  funds  of  the  fraternal  societies  will  be 
dissipated.  All  these  arguments  are  used  in  the  competi- 
tion of  the  insurance  companies  to  break  down  the  influence 
of  the  fraternals. 

On  the  other  side  the  importance  and  value  of  the  frater- 
nals may  be  defended  by  the  following  arguments:  The 
fraternals  have  already  demonstrated  the  general  and  grow- 
ing interest  of  wage  earners  and  persons  of  low  salaries  in 
industrial  insurance ;  and  the  fraternal  societies  adapt  them- 
selves to  the  needs  of  the  workmen  with  inadequate  income. 
In  spite  of  their  defects,  which  may  be  acknowledged,  these 
associations  have  already  paid  out  enormous  sums  for 
sickness  and  death  benefits.  It  is  affirmed  that  in  these 
societies  men  of  ability  can  be  found  to  administer  the 
affairs  of  the  insurance  departments  with  fidelity  and  suc- 
cess, without  having  to  pay  them  extravagant  salaries. 
Naturally  no  one  can  claim  that  the  administration  is  equally 
skilful  and  effective  in  all  societies  alike. 

The  problem  of  improving  the  working  of  the  fraternal 
benefit  societies  has  engaged  general  attention  and  called 
forth  much  discussion.  How  may  the  fraternals  be  made 
useful  in  forwarding  industrial  insurance?  It  is  obvious 
that  fraternal  societies  are  not  adapted  to  furnish  accident 
insurance,  at  least  without  important  modifications  of  pres- 
ent laws.  It  seems  wiser  to  approach  this  matter  from  the 
side  of  the  lawmaking  employers  liable  for  injuries  suffered 
by  the  employees.  The  doctrine  of  the  risque  professionnel 


Il8  INDUSTRIAL  INSURANCE 

places  the  responsibility  for  compensation  first  of  all  on  the 
men  who  direct  and  control  industry,  and  therefore  society 
ought  not  to  require  the  workmen  to  take  the  initiative  in 
this  field. 

In  the  field  of  sickness  insurance  the  lodges  have 
achieved  considerable  success,  and  they  seem  well  adapted 
to  this  purpose.  As  already  indicated  thirteen  of  the  fra- 
ternals  have  paid  since  their  organization  over  $312,514,193 
for  sick  benefits ;  while  the  other  societies  have  their  sickness 
funds  and  aid  families  of  members  in  case  of  illness  and 
need.  Evidently  it  should  not  be  difficult  to  find  a  place 
for  such  associations  in  a  system  of  compulsory  insurance, 
if  the  time  comes  when  society  is  ready  for  that  measure. 
Such  organizations  have  been  utilized  in  Germany  for  just 
this  purpose. 

Some  of  the  fraternals  have  sought  to  establish  old-age 
and  invalid  insurance,  but  this  is  not  general.  The  tenden- 
cies and  results  have  not  yet  been  clearly  revealed.  The 
fraternals  are  very  similar  to  the  French  "mutualists,"  and 
in  France  the  mutualist  societies  are  carefully  included  in 
the  government  schemes  of  provision  for  old-age  pensions. 
Whether  the  state  governments  merely  regulate,  subsidize, 
or  compel  insurance  for  old  age  and  invalidism  they  may 
find  ready  to  hand  an  administrative  machinery  which 
works  at  low  cost  and  has  roots  in  popular  sympathies. 

|  It  is  in  the  sphere  of  "life  insurance"  that  the  fraternal 
societies  of  the  United  States  have  thus  far  found  their 
principal  mission.  As  shown  already  in  the  statistics  the 
fraternals  administer  their  insurance  schemes  at  very  low 
cost — 8.4  per  cent,  of  premiums,  as  compared  with  30  to  40 
per  cent,  of  the  industrial  insurance  companies  which  do 
business  among  the  workingmen  and  collect  premiums  in 
weekly  payments.  This  fact  has  awakened  the  hope  in  many 
minds  that  in  the  near  future  the  workingmen  will  be  able 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     119 

to  provide  for  themselves  reliable  life  insurance  in  societies 
which  rest  on  the  principle  of  mutuality  and  self-govern- 
ment. 

State  regulation. — It  seems  to  be  beyond  reasonable 
question  that  the  interest  of  the  members  and  the  future 
usefulness  of  the  fraternal  societies  demand  a  degree  of  state 
intervention  and  control.  The  argument  for  this  statement 
is  clear  and  strong.  The  vast  majority  of  the  members 
have  not  and  cannot  be  expected  to  have  expert  knowledge 
of  the  business  of  life  insurance,  and  the  officers  themselves 
are  rarely  actuaries  of  repute.  The  strength  of  the  fraternal 
association  lies  in  a  certain  sympathy,  even  sentimentality, 
which  binds  the  members  together  in  strong  bonds,  but 
which  obscures  the  judgment  of  reality  and  hard  mathe- 
matical facts,  and  is  inconsistent  with  the  necessary  cold- 
blooded calculation  and  business  direction  which  assures 
the  wise  management  of  funds.  It  is  almost  universally 
conceded  that  the  other  life  insurance  companies  must  be 
placed  under  very  rigid  control  by  the  state,  just  as  national 
banks  are  supervised  and  made  to  conform  to  regulations 
in  the  public  interest ;  but  it  would  seem  that  the  majority  of 
the  members  of  the  brotherhoods  have  made  themselves 
believe  that  the  law  of  gravity,  the  multiplication  table,  and 
economic  forces  and  laws  may  be  successfully  set  at  defiance 
if  only  men  love  each  other  enough;  and  that  such  common- 
place matters  as  tables  of  mortality  and  interest  rates  are 
applicable  only  to  the  insurance  of  rich  men.  Not  seldom 
have  state  commissioners  of  insurance  and  actuaries  who 
are  true  friends  of  the  f raternals  given  to  the  public  and  to 
the  societies  the  necessary  information  and  suggested  the 
protective  measures  which  must  be  taken  in  order  to  provide 
a  solid  foundation  for  their  insurance  methods.  But  such 
suggestions  have  only  too  generally  been  regarded  with 
suspicion  and  hostility,  and  there  has  been  a  constant  antag- 


120 


INDUSTRIAL  INSURANCE 


onism  between  the  better  and  more  outspoken  commissioners 
of  states  and  the  representatives  of  the  societies.  When  it 
was  shown  that  the  reserve  funds  and  premium  rates  were 

TABLE  I 

MORTALITY  TABLE 

Deaths  Expected  per  1,000  Members 


Age 

Table  of  National 
Fraternal  Congress 

Actuaries  Table 

American  Experi- 
ence Table 

2O  

S.OO 

7.  20 

7.8o 

21  
22  

5-04 
5.O7 

7-38 

7.  46 

7.86 

7  .  Ql 

27.  . 

5.  II 

7.56 

7-96 

24.  . 

c.  it; 

7.67 

8.01 

2S.  . 

<;.  20 

7  .  77 

8.06 

26 

*  26 

7   80 

8  13 

27 

f    72 

/  -"y 
8  01 

«•«  -»o 

8  20 

28 

<%    3Q 

8    14 

8.26 

2O 

547 

8  28 

8.34 

3O 

See 

8.42 

8.43 

•2J 

, 

$  6H 

8.58 

8.51 

•2,2.  .  . 

5.  7s* 

^    ° 

8  7<; 

8.61 

33.  . 

•  i  j 

«;.87 

«•  /o 
8.  02 

8.72 

•3A.  . 

5    * 

6.  oo 

9.  IO 

8.83 

?«;.  . 

6.i«: 

9.  20 

8.0^ 

^5 
36.  .  . 

6.31 

0.48 

9  .OO 

37-  •  . 

6.40 

0.60 

0-  23 

38 

6  70 

901 

941 

•2Q 

"'  ' 

o  02 

IO   13 

9CQ 

4O 

7    17 

j.«->.  j.^ 

10  36 

9.  70 

4.1 

7   41? 

.LU.^W 

10  61 

IO.OI 

4.2 

7   77 

10  80 

IO.  2"? 

47 

/•It 

8  ii 

II  .  2< 

IO.  <C2 

44  

£:;;:;:;: 

8.48 
8.87 

O.  2O 

II.7O 
12.21 
12.84 

10.83 

ii.  16 
ii  .  <6 

47.  .  . 

9.  7"? 

13.  «I2 

I2.OO 

48... 

IO.  27 

14.  26 

12.  «?I 

40-  .. 

IO.82 

I  ^.06 

13.11 

so.  .  . 

ii.  44 

XC.Q4 

13.78 

ei? 

I  *\   71 

21  66 

18  «?7 

60  

6<  . 

22.75 
34   3O 

30.34 
44  08 

26.69 
4O.  13 

70.  .  . 

<?3.6< 

64.03 

6l  .00 

7tr.  . 

JO-^D 
8=1.48 

oz.  «c6 

04.  37 

70  

12=;.  ^< 

130.  07 

131.73 

inadequate  and  that  the  methods  of  administration  must 
lead  to  bankruptcy,  this  was  taken,  and  often  is  still  taken,  to 
be  a  proof  that  the  men  who  give  timely  warning  are  ene- 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES      121 

mies  of  fraternals  and  perhaps  in  the  pay  of  the  regular  life 
insurance  companies.5  On  the  other  hand  the  state  commis- 
sioners have  denied  hostility  and  declare  that  they  desire 
nothing  more  than  the  essential  basis  for  sound  and  endur- 
ing insurance.  An  example  may  be  cited.  The  commis- 
sioner of  Massachusetts  said  in  his  report  for  1904 : 

Fraternal  insurance  has  come  to  stay.     It  should  aim  to  get  upon 

a  basis  that  its  results  will  be  only  good Why  then  should  not 

this  fraternal  question  be  taken  up  and  considered  reasonably  and 
without  prejudice,  for  the  purpose  of  securing  through  the  legisla- 
tures a  uniform  measure  of  as  wide  application  as  possible,  which  will 
at  least  prevent  the  organization  of  new  companies  on  lines  which 
have  been  demonstrated  over  and  over  again  to  be  faulty,  and  give 
the  companies  now  in  existence  the  benefit  of  a  uniform  code  in  all 
the  states?6 

The  Insurance  Commissioner  of  North  Carolina  said 
in  1905 : 

In  the  opinion  of  the  Commissioner  it  would  be  best  that  all 
associations  and  orders  doing  business  in  this  state  should  be  required 
to  have  and  keep  a  certain  number  of  members  and  a  certain  amount 
of  business,  or  not  be  allowed  to  commence  or  continue  business.  It 
is  not  best,  or  for  the  protection  of  our  people,  that  associations  of 
this  character  should  be  allowed  to  organize  with  less  than  a  dozen 
men,  and  no  assets  or  capital  or  responsibility  back  of  them.7 

The  necessity  of  further  legislation  in  order  to  prevent 
the  entire  ruin  of  the  fraternal  movement  has  of  late  been 
recognized  quite  generally  by  the  enlightened  men  in  the 
societies  and  by  their  advisers.  Such  facts  as  the  following 
have  startled  many  into  action  and  already  led  to  a  certain 
improvement  and  reorganization.  It  appears  that  out  oi 

5  The  grounds  for  rejecting  the  calculations  of  the  fraternal  societies 
are  partly  found  in  the  discrepancies  apparent  in  the  mortality  tables  of 
the  fraternals  as  compared  with  those  used  by  insurance  companies. 

*  Report  for  1904,  Part  II,  p.  x. 

7  Report,  p.  xiv. 


OF  THt 

NIVEJR8 


ITYj 
jk^r 


122  INDUSTRIAL  INSURANCE 

114  fraternal  benefit  societies  only  19  have  accepted  even 
the  premium  rates  of  the  National  Fraternal  Congress;  and 
of  these  19  associations  not  one  has  adopted  a  rate  which 
will  cover  completely  the  costs  of  administration  and  meet 
fully  the  claims  of  the  beneficiaries.  A  report  made  to  the 
National  Fraternal  Congress  in  1906  made  clear  that  during 
the  year  1905,  with  a  membership  of  3,634,467,  the  increase 
in  membership  was  only  58,344.  Eighteen  of  the  most 
important  fraternals  gained  during  1905  only  96,877  new 
members  and  lost  106,373.  The  attorney  and  counsellor 
of  one  of  the  great  societies  has  expressed  very  strongly 
the  judgment  of  the  competent  leaders  in  favor  of  suitable 
state  control  and  disclosed  the  nature  of  the  crisis: 

I  do  not  believe  that  it  is  safe  that  the  fraternal  beneficiary 
societies  be  left  longer  without  proper  legislative  guidance  in  the 
matter  of  rates.  I  am  sure  that  the  officers  and  managers  of  frater- 
nal societies  recognize  that  relief  must  come  soon,  and  that  it  must 
come  from  legislative  enactments.  It  is  nearly  impossible  for  one  or 
a  few  societies  to  adopt  and  apply  adequate  rates  so  long  as  other 
societies  do  not  do  so.  There  are  a  sufficiently  large  number  of 
societies  who  do  not  yet  appreciate  the  necessity  for  adequate  rates 
to  make  it  impossible  to  see  a  day  in  the  future  when  all  of  the 
societies  will  have  placed  themselves  upon  a  permanent  basis. 

In  order  to  meet  the  needs  and  demands  of  the  members  of  these 
societies,  the  legislatures  must  designate  more  clearly  the  character  of 
contracts  that  may  be  made,  and  benefits  granted  by  these  societies 
than  they  have  done  in  the  past.  It  is"  essential  to  their  success  and 
perpetuity  not  only  that  they  be  required  to  accumulate  adequate 
reserves  upon  level  life  contracts,  but  that  provision  be  made  whereby 
reserves  are  not  appropriated  to  the  benefit  of  persistent  members,  as 
in  the  past,  but  that  a  member  who  pays  the  reserve  accumulation, 
shall  recognize  that  he  has  an  interest  in  it  and  that  it  shall  be  held 
sacred  for  the  maturity  of  his  certificate. 

I  recognize  that  this  will  be  a  new  departure  in  fraternalism, 
because  the  theory  of  rates  in  these  societies  has  been  based  upon  an 
agreement  between  the  members  that,  even  if  an  accumulation  of 
reserve  was  made,  the  withdrawing  or  lapsing  member  should  leave 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     123 

his  interest  in  the  accumulation  in  order  that  persistent  members 
might  have  insurance  afforded  them  at  less  than  actual  cost. 

It  seems  probable  that  the  resolutions  passed  on  October 
4,  1906,  by  the  National  Convention  of  Insurance  Commis- 
sioners indicate  the  essential  points  of  the  reform  demanded 
by  the  enlightened  friends  of  the  fraternal  organizations. 

The  laws  governing  fraternal  societies  should  provide  that  where 
the  hope  of  level  rate  is  held  out  to  the  members,  that  such  rates 
should  be  less  than  those  shown  as  necessary  by  the  American  Experi- 
ence Table  of  Mortality  with  interest  at  the  rate  of  4  per  cent,  per 
annum.  This  will  work  no  hardship  upon  the  members,  for  any 
excess  can  be  returned  each  year  by  an  annual  accounting,  thus 
guaranteeing  that  they  will  not  have  to  pay  more  than  the  actual  cost 
of  their  insurance  while  providing  for  the  hope  and  permanency  of 

the  association We  urge  the  enactment  of  laws  providing  as 

follows:  (i)  No  society  shall  be  organized  in  or  admitted  to  any 
state  after  July  i,  1907,  that  does  not  collect  adequate  rates,  accord- 
ing to  the  above-mentioned  standard.  (2)  All  societies  doing  business 
in  any  state  should  collect  adequate  rates  from  new  members  admitted 
after  January  i,  1909.  (3)  Members  paying  inadequate  rates  should 
be  placed  in  a  class  by  themselves,  but  should  be  permitted  to  transfer 
to  the  adequate  rate  class  at  attained  ages,"  without  expense  or  medical 
examination,  within  two  years,  and  the  funds  of  the  two  classes 
should  be  kept  separate8 

The  above  report  was  signed  by  the  Insurance  Commis- 
sioners of  Illinois,  Pennsylvania,  Maine,  Kentucky,  Missis- 
sippi, New  Jersey,  and  Wisconsin,  composing  the  Committee 
of  Fraternal  Insurance;  and  the  report  was  unanimously 
adopted. 

The  opinion  of  M.  M.  Dawson,  the  actuary,  is  worth 
citing.  He  believes  that  the  reorganization  now  going  on 
in  the  fraternal  societies  is  sincere;  that  the  leaders  are  in 
touch  with  actuaries  and  will  ultimately  be  supported  by 
the  members;  that  the  administration  is  honest  and  eco- 

8  Carlos  S.  Hardy,  What  Is  Necessary  for  the  Future  of  Fraternal 
Societies?  1906. 


124  INDUSTRIAL  INSURANCE 

nomical;  that  the  medical  selection  is  good;  that  the  rates 
are  being  adjusted  to  the  losses  and  the  necessary  reserves 
are  being  provided;  that  after  the  shock  of  reorganization 
the  numbers  will  increase.9 

A  rather  intensive  study  of  the  working  of  fraternal 
lodges  in  the  anthracite  coal  region  has  been  made  by  Mr. 
P.  Roberts,10  and  from  that  account  certain  illustrations  are 
taken.  In  this  region  are  found  representatives  of  most  of 
the  countries  of  Europe.  Roberts  says  that  in  the  cities  and 
towns  there  are  some  brotherhoods  whose  chief  object  is  the 
cultivation  of  sociability,  and  the  members  of  such  lodges 
belong  to  the  comfortable  classes  and  to  the  professional 
people.  But  the  brotherhoods  of  miners  pursue  a  more 
practical  and  utilitarian  object  and  their  principal  purpose 
is  to  provide  sick  benefits  and  life  insurance  for  the  protec- 
tion of  their  families.  These  miners  are  not  rich  enough  to 
spend  much  money  on  purely  sociable  organizations.  They 
have  a  special  repugnance  to  being  buried  at  public  cost,  and 
they  pay  their  dues  regularly  in  order  to  be  sure  of  the  death 
benefit  when  it  is  needed.  Beyond  these  two  emergencies 
the  average  miner  does  not  give  himself  great  anxiety.  An 
experienced  insurance  agent  acquainted  with  these  people 
estimates  that  75  per  cent,  of  the  workmen  pay  insurance 
premiums,  about  25  per  cent,  paying  sick  insurance  prem- 
iums and  50  per  cent,  for  life  insurance  on  policies  ranging 
from  $100  to  $300.  All  the  brotherhoods  have  a  religious 
basis,  the  Catholic  societies  having  a  close  relation  with  the 
ancient  church  and  having  priests  as  leaders.  The  Slav 
miners  have  many  societies  which  bear  the  names  of  race 
heroes  or  saints.  Ordinarily  these  brotherhoods  give  sick 
benefits  and  burial  money.  The  Irish  and  Slav  beneficial 

0  Annals  of  American  Academy  of  Political  and  Social  Science,  1905, 
pp.  128  ff. 

10  Anthracite  Coal  Communities,  pp.  259  f. 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES      125 

societies  have  female  members,  and  among  the  Protestant 
orders  are  auxiliary  societies  for  women,  as,  for  example, 
the  Daughters  of  Rebecca,  Daughters  of  Pocahontas,  etc. 
The  Catholic  orders  are  not  so  numerous  and  are  divided  as 
the  Protestant,  and  therefore  the  Catholic  lodges  are  usually 
stronger  financially.  The  individualistic  spirit  among 
Protestants  shows  itself  in  the  brotherhoods,  as  well  as  in 
the  churches,  and  this  fact  makes  the  insurance  burden 
heavier  for  their  members.  The  financial  administration 
of  the  lodges  rests  in  the  hands  of  the  members  and  these 
officials  handle  considerable  sums  in  the  course  of  a  year. 
The  fact  that  betrayal  of  trust  is  very  rare  speaks  well  for 
the  character  of  the  workmen.  It  is  impossible  to  make  an 
exact  statement  of  the  income  and  expenditures  of  the 
brotherhoods  of  the  region.  In  the  neighborhood  of  Oly- 
phant,  with  7,800  inhabitants,  it  is  estimated  that  the 
monthly  payments  are  about  $1,886.  The  monthly  dues  for 
each  member  range  from  25  to  60  cents.  When  a  member 
dies  an  assessment  is  levied  of  $i  to  cover  the  death  benefit. 
In  the  cities  of  the  anthracite  region  the  fraternal  orders 
flourish,  and  it  is  thought  that  their  yearly  receipts  are 
about  $1,250,000.  The  weekly  allowances  for  sick  benefits 
range  from  $4  to  $6  and  receipt  of  benefits  ceases  with  the 
third  or  at  most  the  sixth  month.  After  the  first  half  of 
the  period  the  benefit  is  reduced  one-half  and  at  the  end  of 
the  limit  all  claims  cease.  After  that  the  indigent  member 
has  no  recourse  but  poor  relief.  In  case  of  the  death  of  a 
member  the  family  receives  from  $50  to  $125  death  benefit, 
and  the  man  whose  wife  dies  receives  half  these  rates  for 
burial  expenses.  Roberts  sees  distinct  advantage  in  the 
insurance  work  of  these  brotherhoods.  The  workmen  find 
in  the  administration  of  the  business  of  the  lodge  a  great 
satisfaction.  The  business  sessions  call  for  discussions  and 
explanations,  for  courteous  conduct  and  tactful  speech  with 


126  INDUSTRIAL  INSURANCE 

much  self-control  under  provocation;  and  this  experience 
tends  to  enlarge  the  scope  of  thought,  awaken  the  mind, 
and  refine  the  manners.  Independence,  self -trust,  and  fore- 
sight are  qualities  which  elevate  the  social  condition  of 
workingmen,  and  in  no  circle  of  activity  are  these  qualities 
so  developed  as  in  the  meetings  and  business  of  the  brother- 
hoods. 

And  yet  these  lodges  reveal  various  defects.  They  are 
so  split  up  into  numerous  small  bodies  that  much  of  the 
energies  and  funds  of  the  members  are  wasted.  By  com- 
bination and  federation  the  efficiency  of  the  societies  would 
without  doubt  be  promoted  and  the  basis  for  security  made 
deeper  and  broader.  If  the  local  risk  could  be  joined  with 
that  of  a  wide  area  the  insurance  would  rest  upon  a  firmer 
basis  in  times  of  local  epidemics. 

Ordinarily  we  find  in  the  statutes  of  the  organizations  a 
provision  similar  to  that  formerly  a  part  of  the  German 
sickness  insurance  law,  to  the  effect  that  insured  persons 
who  have  become  ill  through  their  own  fault,  as  by  engag- 
ing voluntarily  in  fights,  or  by  drunkenness,  or  venereal 
vice,  lose  their  claim  for  benefit  or  at  least  lose  it  in  part. 
The  society  protects  itself  against  fraud  by  means  of  ex- 
aminations made  by  a  physician  or  by  visits  of  committees. 
When  a  man  is  member  of  several  societies  and  the  sum  of 
benefits  is  greater  than  wages  he  is  tempted  to  stimulate 
sickness  in  order  to  have  a  vacation  at  the  expense  of  the 
funds.  Some  of  the  brotherhoods  avoid  this  danger  by 
having  an  understanding  between  the  brotherhoods  that 
the  sum  of  all  benefits  shall  not  be  greater  than  wages.  This 
precaution  is  not  always  followed  and  neglect  leads  to 
occasional  abuses. 

The  negroes  have  imitated  the  whites  in  the  organiza- 
tion of  fraternal  benefit  societies  and  their  methods  have 
peculiarities  which  correspond  to  race  traits.  When  we 


THE  INSURANCE  OF  THE  FRATERNAL  SOCIETIES     127 

consider  the  situation  of  the  millions  of  these  "brothers 
in  ebony"  who  stand  in  sore  need  of  insurance,  without 
legal  organization  or  protection,  we  can  more  easily  com- 
prehend the  force  of  an  argument  for  a  national  movement 
for  compulsory  insurance.  For  the  negroes  themselves 
compulsory  insurance  would  be  a  school  of  economy  and 
thrift.  As  a  matter  of  fact  many  thousand  of  this  race 
remain  without  any  sort  of  aid  in  times  of  sickness  and  un- 
employment and  they  either  become  a  burden  on  poor  relief 
or  suffer  the  effects  of  semi-starvation.  As  an  illustration 
of  certain  aspects  of  their  societies  we  may  cite  a  picture 
from  a  letter  from  Nashville,  Tenn.,  by  Miss  Mary  Woods, 
dated  July  8,  1906  : 

There  are  many  brotherhoods  among  the  colored  people.  The 
Ladies  of  Queen  Esther's  Court  on  festival  occasions  wear  purple  hats 
and  their  queen  wears  a  crown.  At  the  funeral  services  of  members 
there  are  ceremonies  which  remind  one  of  children's  plays.  All  the 
brotherhoods  pay  sick  benefits  and  death  benefits.  Of  late  reports  of 
dishonest  treasurers  have  not  been  frequent,  but  formerly  they  were 
common,  and  probably  there  is  still  much  imposition.  The  poor 
things  are  ignorant  and  easily  fall  victims  to  designing  and  shrewd 
men.  One  impostor  was  preacher,  undertaker,  and  owner  of  a  vault 
and  cemetery.  His  enemies  say  that  he  had  formed  a  partnership 
with  certain  physicians  and  hospitals  by  which  he  gained  still  more 
from  the  unfortunate  people  over  whom  he  had  gained  power.11 

11  Much  detailed  information  about  the  actuarial  problems  of  the  fra- 
ternal societies  is  found  in  the  Consolidated  Chart  (published  by  the 
Fraternal  Monitor,  Rochester,  N.  Y.)  :  in  Analyses  of  Fraternal  Societies 
and  Illustrations  of  Premium  Computations,  by  Abb  Landis,  1906;  in 
Friendly  Societies  and  Fraternal  Orders,  by  Abb  Landis ;  and  in  Insur- 
ance, by  W.  A.  Fricke,  1898 ;  in  papers  of  A.  Warnock,  F.  A.  Betts,  M.D. 
Campbell,  W.  A.  Fricke. 


CHAPTER  V 
THE  EMPLOYERS'  LIABILITY  LAW 

The  only  forms  of  strictly  legal  relief  of  workingmen, 
in  case  of  incapacity  for  labor  caused  by  accidents,  are  poor 
relief  and  indemnity  secured  under  the  law  which  makes 
employers  liable  for  damages  caused  their  employees 
through  negligence  on  the  part  of  the  employers.  The  right 
to  poor  relief  is  not  one  which  can  be  enforced  by  legal 
process,  and  when  such  aid  is  granted  it  is  insufficient,  hu- 
miliating, and  destructive  of  self-respect,  so  that  it  is 
dreaded  and  hated  by  every  man  who  is  not  already  pauper- 
ized in  spirit.  We  have  here  to  outline  the  chief  facts  in 
relation  to  the  rights  of  injured  workingmen  under  the 
liability  law.1 

I.    THE  LAW 

The  basis  of  all  legislation  and  "judge-made  law"  in  this 
field  is  the  ancient  English  common  law  governing  relations 
of  masters  and  servants.  According  to  that  law  the  em- 
ployee upon  entering  service  was  supposed  to  assume  the 

1  References :  F.  J.  Stimson,  Handbook  to  the  Labor  Law,  1895,  pp. 
161  ff. ;  Report  of  the  Committee  on  Relations  between  Employer  and 
Employee,  Massachusetts  (1904)  ;  Tenth  Special  Report  of  the  Commis- 
sioner of  Labor,  Labor  Laws  (1904),  and  later  Bulletins  of  the  Bureau  of 
Labor;  S.  D.  Fessenden,  "Employers'  Liability  in  the  United  States," 
Bulletin  of  the  Department  of  Labor,  No.  31,  November,  1900;  E.  Freund, 
Police  Power,  sees.  322,  633 ;  C.  B.  Labatt,  Commentaries  on  the  Law  of 
Master  and  Servant  (1904)  ;  W.  G.  Clay,  Abstract  of  the  Law  of  Employ- 
ers' Liability  and  Insurance  against  Accidents  (1897)  ;  Annual  Report  of 
New  York  Labor  Statistics  (1899),  Vol.  XVII,  pp.  555-1162;  C.  Reno, 
Law  of  the  Employers'  Liability  Acts  (2d  ed.,  1903)  ;  Industrial  Com- 
mission,  Report,  Vol.  V,  pp.  76-87,  Vol.  XVII,  pp.  970-1135,  Vol.  XIX, 
PP-  932-39  J  Bulletin  of  the  Department  of  Labor,  No.  40  (Weber)  ;  H.  A. 
Schaffner,  Railroad  Coemployment  (1905). 

128 


THE  EMPLOYERS'  LIABILITY  LAW  129 

ordinary  risks  of  the  occupation — the  doctrine  of  "assump- 
tion of  risk."  It  was  thought  that  a  free  man  entering  into 
a  contract  of  service  would  usually  be  acquainted  with  the 
dangers  attending  that  occupation  and  would  have  no  claim 
upon  his  employer  if  he  were  injured.  If,  however,  there 
were  extraordinary  dangers  which  should  be  known  by  the 
manager  but  not  by  the  employee,  such  risks  were  not  sup- 
posed to  be  assumed.  It  would  be  the  duty  of  the  employer 
to  make  these  unusual  dangers  known  to  the  workman,  and 
if  he  failed  to  do  so  and  harm  resulted,  the  employer  would 
be  liable. 

Another  famous  doctrine  was  the  "fellow-servant"  in- 
terpretation. According  to  this  principle  the  employer  could 
not  be  required  to  pay  indemnity  to  an  injured  workman  if 
the  accident  and  hurt  came  from  the  carelessness  of  a  com- 
panion in  the  service.  This  doctrine  is  of  comparatively 
recent  origin.  About  the  year  1840  this  rule  was  developed 
by  courts  in  England  and  in  the  United  States  and  employers 
were  exempted  by  judicial  decisions  from  payment  of 
damages  where  the  fault  lay  with  a  fellow-workman.  Nor 
was  this  unnatural,  if  one  starts  from  the  idea  of  personal 
culpability;  for  in  no  proper  sense  is  an  employer  directly 
to  blame  for  an  injury  caused  by  another.  The  fact  that 
the  principle  works  hardship  indicates  a  fault  in  the  law 
itself  not  in  its  logical  application.2 

There  is  another  aspect  of  the  case,  however,  which 
introduces  doubt ;  the  employer  is  responsible  for  his  agents, 
since  he  selects  them  and  may  be  negligent  in  this  selection 
and  in  giving  them  power  to  control  the  action  and  fortunes 
of  subordinated  workmen.  In  this  view  the  negligence  of 
a  fellow-servant  who  is  in  position  of  director  of  others  is 
the  fault  of  the  original  manager  and  proprietor.  Many 

2  Pollock,  Law  of  Torts,  7th  ed.,  p.  96;  Field,  U.  S.  Supreme  Court 
Reports  (112  U.  S.),  p.  3867. 


130  INDUSTRIAL  INSURANCE 

decisions  have  turned  on  this  fact  and  made  the  employer 
liable  for  indemnity  if  the  fellow-servant  was  unfit  for  his 
position,  incompetent,  drunken,  or  negligent  so  as  to  cause 
injury.  It  is  not  strange  that  judicial  opinions  should  differ 
and  that  the  course  of  legislation  should  be  crooked.  Thus 
we  have  in  one  direction  the  language  of  Justice  Field  (C. 
M.  and  St.  Paul  Railway  Company  vs.  Ross,  1884,  112 
U.  S.,  377) ;  in  holding  that  a  corporation  should  be  held 
responsible  for  the  acts  of  a  servant  exercising  control  and 
management : 

He  is  in  fact,  and  should  be  treated  as,  the  personal  representative 
of  the  corporation,  for  whose  negligence  it  is  responsible  to  subordi- 
nate servants.  This  view  of  his  relation  to  the  corporation  seems  to 
us  a  reasonable  and  just  one  and  it  will  insure  more  care  in  the  selec- 
tion of  such  agents,  and  thus  give  greater  security  to  the  servants 
engaged  under  him  in  an  employment  requiring  the  utmost  vigilance 
on  their  part,  and  prompt  and  unhesitating  obedience  to  his  orders. 

The  United  States  is  the  only  country  now  where  this 
labored  dispute  has  any  significance;  for  with  the  introduc- 
tion of  the  laws  relating  to  the  absolute  liability  of  employ- 
ers without  regard  to  negligence  and  with  the  compulsory 
insurance  laws  the  idea  of  negligence  of  fellow-servants 
has  no  meaning. 

It  is  the  duty  of  employers,  under  the  common  law,  to 
provide  in  a  reasonable  way  such  machinery,  buildings,  and 
appliances  as  will  insure  safety.  Only  ordinary  care  is 
obligatory  and  the  law  does  not  demand  the  impossible  in 
asking  absolute  security  against  harm,  nor  even  the  use  of 
the  most  recent  and  costly  devices,  but  only  such  as  are 
found  in  a  well-arranged  establishment.  If  a  defect  is 
known  to  exist  the  employer  is  not  held  liable,  although  he 
may  be  required  to  give  indemnity  if  it  is  shown  that  the 
injured  workman  has  repeatedly  called  attention  to  the 
danger  and  asked  for  protection. 


THE  EMPLOYERS'  LIABILITY  LAW  131 

Another  rule  is  that  of  "contributory  negligence;"  an 
injured  workman  in  order  to  recover  damages  must  prove 
that  he  did  not  bring  harm  to  himself  by  his  own  careless- 
ness. The  employer  is  under  obligations  to  instruct  a  new 
employee  in  regard  to  any  special  dangers  of  the  occupation, 
and  this  requirement  is  more  strict  where  the  employee  is 
young,  inexperienced,  or  of  inferior  mental  capacity. 

According  to  the  common-law  rule  a  difference  is  made 
between  the  case  where  the  employee  is  instantly  killed  and 
that  where  he  survives  for  a  time.  In  the  former  case  the 
legal  representatives  of  the  victim  cannot  recover  damages 
from  a  negligent  employer.  This  rule  has  been  modified  in 
the  statutes  of  some  states.  It  is  said  that  an  action  for  dam- 
ages on  account  of  homicide  could  not  be  maintained  prior, 
to  Lord  Campbell's  Act  in  1846  (9  and  10  Victoria,  B.  C. 

93)- 

A  few  of  the  states  have  redefined  the  main  provisions 
of  the  common  law.  In  some  states  only  corporations,  and 
in  others  all  employers,  are  liable  for  injuries  to  employees 
caused  by  defects  in  machinery  of  plant  or  by  negligence 
of  employers  or  their  representatives.3  California  and 
Montana,  which  have  adopted  the  general  codes  prepared  by 
the  late  David  Dudley  Field,  attempt  to  recast  the  common 
law  in  still  greater  detail.4 

Gradually  the  common  law  has  been  displaced  or  pro- 
foundly modified  by  statutes  as  well  as  by  judicial  interpre- 
tations. On  the  whole  the  changes  have  been  in  the 
direction  of  making  the  law  more  severe  for  the  employer 
and  to  extend  the  protection  of  the  workingmen.  In  order 
to  counteract  the  tendency  among  employers  to  induce  or 
require  their  employees  to  release  them  from  liability  by  a 

8  Mass.,  1894,  499;  Col.,  1893,  77',  Ind.,  7083;  Ala.,  2590. 
*  Stimson,  op.  cit. 


132  INDUSTRIAL  INSURANCE 

contract  clause  in  the  agreement  to  hire,  some  states  have 
enacted  statutes  making  it  illegal  to  make  such  contracts; 
but  the  courts  have  annulled  them  even  in  the  absence  of 
express  statute. 

In  order  to  correct  the  injustice  of  the  common  law 
which  denied  indemnity  in  case  the  workman  was  instantly 
killed,  a  law  has  been  passed,  as  in  Massachusetts,  securing 
for  the  survivors  right  of  action  in  a  case  where  such  right 
would  have  existed  had  the  person  lived  for  some  time  after 
the  accident.  The  amount  which  can  be  recovered  may  or 
may  not  be  fixed  by  the  statute. 

The  Employers'  Liability  Act  of  Massachusetts,  as 
summarized  by  the  commission  of  1903,  may  be  taken  to  rep- 
resent the  effort  of  legislators  to  extend  the  right  of 
employees  to  recover  damages.  According  to  this  statute 
employees  may  recover  for  any  defect  in  the  condition  of 
the  ways,  works,  or  machinery  of  the  employer  caused  by 
negligence  of  the  employer  or  of  some  one  in  his  employ 
whose  duty  it  was  to  see  that  the  same  were  in  proper  con- 
dition or  properly  repaired.  Employees  may  recover  for  the 
negligence  of  a  superintendent,  or  of  one  acting  as  superin- 
tendent under  the  authority  of  the  employer.  On  railroads 
the  company  is  liable  to  the  employee  injured  through  the 
negligence  of  a  person  having  the  charge  of  any  signal, 
switch,  locomotive,  engine,  or  train.  In  the  event  of  the 
death  of  the  employee  his  legal  representatives  have  the 
right  to  recover  damages  against  the  company.  If  death 
was  not  instantaneous,  or  was  accompanied  by  conscious 
suffering,  the  widow,  and  if  no  widow  the  next  of  kin. 
dependent  on  the  employee  at  his  decease,  may  recover 
damages  against  the  company.  If  there  are  two  suits,  one 
by  the  legal  representatives  and  one  by  the  widow  or  next 
of  kin,  the  total  amount  recovered  shall  not  exceed  $5,000, 


THE  EMPLOYERS'  LIABILITY  LAW  133 

to  be  apportioned  by  the  jury.  In  the  laws  of  some  states 
the  sum  which  may  be  recovered  is  not  fixed  or  limited,  but 
left  to  the  discretion  of  the  jury.  Employees  themselves 
suing  under  this  act  can  recover  an  amount  not  exceeding 
$4,000.  In  any  case  under  this  act  resulting  in  death,  which 
follows  instantaneously  or  without  conscious  suffering,  the 
amount  recoverable  is  not  less  than  $500  and  not  more  than 
$5,000,  to  be  assessed  according  to  the  degree  of  negligence 
of  the  person  for  whose  negligence  he  is  made  liable.  Notice 
must  be  given  the  employer  within  a  given  period  after  the 
accident.  Employees  working  for  subcontractors  upon  the 
machinery,  ways,  works,  or  plant  of  the  employer  have  the 
same  rights  against  the  employer  as  have  other  employees. 
To  have  right  to  recover  indemnity  the  employee  must  have 
given  due  notice  of  the  defect  which  caused  his  injury.  An 
employer  who  has  contributed  to  certain  insurance  funds 
for  the  benefit  of  injured  employees  may  prove  in  mitigation 
of  damages  recoverable  by  an  injured  employee  under  this 
act,  the  proportion  contributed  by  him  to  the  benefit  received 
by  such  employee.  This  act  does  not  apply  to  injuries 
caused  to  domestic  servants  or  farm  laborers  by  fellow- 
employees. 

Contracting  out. — Even  without  statute  it  would  appear 
to  be  illegal  to  make  a  contract  releasing  the  employer  from 
his  common-law  responsibilities;  but  some  states  have  en- 
acted laws  expressly  nullifying  such  contracts,  with  the 
purpose  of  preventing  employers  from  using  their  superior 
power  as  employers  to  make  such  agreements  the  basis  of 
granting  employment.5  In  some  states  such  contracts  are 
void  only  where  the  injuries  arise  from  the  negligence  of 
the  employer  or  of  someone  who  represents  him.6 

5  Ohio,   1890,  p.   149;   Ind.,   7083;  Tex.,    1891,   24;   Wy.  Const.,    10,  4; 
1891,  28;  Flor.,  2346;  in  Ohio  the  law  applies  to  railroads  only. 
"Mass.,  1894,  508,  6;  Ala.,  2590;  Minn.,   1887,   13. 


INDUSTRIAL  INSURANCE 


II.    CRITICISM    OF  LIABILITY  LAW 

It  is  almost  universally  agreed  among  persons  of  ex- 
perience that  the  liability  laws,  whether  common  or  statute, 
are  not  satisfactory  to  either  employers  or  to  the  employed. 
On  the  one  hand  we  hear  complaints  from  the  employers 
who  affirm  that  legislatures,  under  pressure  from  trade 
unions,  are  steadily  making  statutes  more  drastic  and  severe 
upon  employers  and  more  favorable  to  employees;  that 
juries  award  verdicts  without  regard  to  justice,  measured 
more  by  what  the  defendant  can  pay  than  by  the  earning 
power  of  the  person  who  has  suffered  loss;  that  employees 
are  more  eager  to  resort  to  litigation  and  persistent  in  press- 
ing suits;  that  dishonest  lawyers  take  advantage  of  the 
situation  and  for  contingent  fees  urge  injured  workmen  to 
prosecute  claims,  many  of  which  are  without  foundation  in 
justice;  that  to  protect  themselves  from  ruinous  risks  they 
are  compelled  to  pay  enormous  sums  to  casualty  companies 
for  premiums,  and  even  then  cannot  afford  to  pay  premiums 
large  enough  to  carry  the  entire  risk;  that  employers  of 
moderate  means  may  be  crippled  or  utterly  ruined  by  the 
awards  of  juries  and  by  the  costs  of  litigation. 

On  the  other  hand  the  employees  offer  objections  from 
their  point  of  view.  They  assert  that  they  are  denied  speedy 
trial  in  courts,  owing  to  the  crowded  condition  of  dockets 
and  the  tricks  of  attorneys  of  defendants  ;  that  in  addition  to 
their  employers  they  must  fight  powerful  insurance  com- 
panies who  resist  their  claims  to  the  bitter  end;  that  these 
companies  are  even  more  pitiless  than  the  employers;  that 
an  ordinary  workman  has  no  chance  when  pitted  against 
the  shrewd  claim  agents,  expert  attorneys  of  employers,  and 
insurance  companies;  that  before  they  can  hope  to  recover 
damages  years  of  deprivation  and  misery  must  pass  while 
the  suit  is  appealed  from  court  to  court  and  their  rights 
are  denied;  and  that  even  if  they  are  fortunate  enough  to 


THE  EMPLOYERS'  LIABILITY  LAW  135 

recover  indemnity,  after  long  waiting  and  suffering,  the 
costs  of  litigation  have  consumed  most  of  the  award. 
Meantime  they  have  been  kept  out  of  the  interest  on  what 
was  justly  due  them.  An  extreme  instance  is  known  to  the 
writer  where  a  great  corporation,  after  twenty-one  years  of 
resistance  was  finally  compelled  to  pay,  but  meantime  the 
interest  which  they  retained  was  equal  to  the  full  amount 
of  the  award  to  which  the  injured  man  had  a  right  from  the 
moment  he  was  hurt. 

in.  EMPLOYERS'  LIABILITY  INSURANCE  COMPANIES 

A  natural  product  of  the  working  of  liability  laws, 
under  modern  economic  conditions,  is  the  rapid  and  enor- 
mous growth  of  private  companies  which  undertake  to 
relieve  employers  from  the  dangers  and  burdens  of  lawsuits 
instituted  by  injured  workmen  or  by  the  heirs  of  those  killed 
in  industrial  accidents.  We  have  said  that  this  form  of 
insurance  is  a  natural  outgrowth  of  the  situation,  artificially 
created  by  the  law,  an  inevitable  effort  to  protect  the  solv- 
ency of  employers  against  the  ruinous  effects  of  damage 
suits.  The  employers  offer  a  defense  of  their  action  which 
is  relatively  just  and  yet  sounds  like  an  indictment  of  the 
law  itself.  They  say,  that  without  such  insurance  their 
business  credit  might  be  hopelessly  compromised;  that  a 
certain  class  of  lawyers,  known  as  "ambulance  chasers," 
lurk  about  the  neighborhood  of  works  where  accidents  are 
frequent  with  the  hope  of  securing  clients  by  offering  their 
services  without  hope  of  fees  unless  a  suit  is  won  for  the 
poor  plaintiff,  in  which  case  he  takes  the  lion's  share  of  the 
award,  while  the  workman  receives  a  paltry  sum.  In  sheer 
self-defense  they  resort  to  the  insurance  company  for  pro- 
tection. When  a  workman  refuses  to  make  settlement  with- 
out litigation  they  feel  justified  in  turning  him  over  to  the 
tender  mercies  of  the  foreign  corporation  and  let  them 


136  INDUSTRIAL  INSURANCE 

fight  out  the  battle.  Even  so  the  employer  is  not  entirely 
free  from  danger,  since  in  practice  he  does  not  feel  able  to 
pay  the  premium  required  to  purchase  entire  immunity,  and 
sometimes,  as  in  a  case  where  the  award  is  $20,000  and  the 
policy  guarantees  only  $5,000  the  employer  may  be  severely 
worsted  after  all. 

The  extent  and  cost  of  employers'  liability  insurance 
may  be  seen  from  the  following  figures.  In  the  five  years 
between  1894  and  1898  ten  companies  received  in  premiums 
from  employers  $19,401,511  and  paid  out  in  losses  $9,382,- 
689;  the  premiums  received  were  more  than  twice  the  pay- 
ments for  protection. 

How  much  of  this  $9,382,689,  after  paying  their  law- 
yers, ever  reaches  the  workingmen  for  whom  the  law 
intended  it  should  be  paid  ?7  In  the  state  of  Illinois,  in  one 
year,  15  of  these  companies  collected  in  premiums  from 
employers  $1,825,467.51  and  paid  claims  to  the  amount  of 
$876,940.95. 8  It  must  not  be  supposed  from  these  figures 
that  the  insurance  companies  are  reaping  inordinate  profits 
from  these  transactions,  and  we  may  accept  their  explana- 
tion of  the  figures  that  the  expenses  of  doing  business  are 
actually  extremely  great.  It  is  claimed  by  friends  of  the 
companies  that  the  rate  of  commission  alone  for  securing 
business  will  average  between  25  and  30  per  cent.,  to  which 
must  be  added  salaries  and  traveling  expenses  of  special 
agents;  rent  and  other  expenses  of  branch  offices;  cost  of 
surveys  and  inspections;  home  office  expenses;  rent,  clerk 
hire,  and  a  multitude  of  other  small  charges;  so  that  the 
expenses  average  about  50  per  cent,  of  the  premiums,  and 
the  margin  of  profit  left  is  about  10  per  cent,  of  receipts.9 

''Report  of  Industrial  Commission,  Vol.  VII,  p.  78. 

8  Thirty-seventh  Report  of  Insurance  Superintendent  of  Illinois,   1905, 
p.  xvii. 

9  W.  F.  Moore,  "Liability  Insurance,"  Insurance,  published  by  Annals 
of  American  Academy,  pp.  328,  330. 


THE  EMPLOYERS'  LIABILITY  LAW  137 

When  we  compare  this  enormous  cost  with  that  of  German 
compulsory  accident  insurance,  or  even  with  that  of  French 
syndicates  or  private  companies  under  recent  laws,  we  can 
see  that  the  industry  of  this  country  is  subjected  to  a  burden 
which  is  beyond  reason;  and  it  does  not  seem  possible  that 
a  large  body  of  shrewd  business  men  will  very  long  tolerate 
such  a  law  and  the  conditions  which  it  creates. 

This  form  of  insurance  began  to  be  used  about  1887, 
and  the  volume  of  business  increased  from  $150,000  in  that 
year  to  $14,700,000  in  1904;  but  these  figures  include  all 
kinds  of  liability  policies  excepting  steam  boiler  policies. 

IV.    INDIRECT  CONSEQUENCES 

One  effect  of  the  employers'  liability  laws,  in  connection 
with  other  motives,  is  the  very  common  custom  of  paying 
the  expenses  of  medical  care  after  an  accident,  and  even  of 
continuing  the  wages  or  part  of  them  during  temporary 
incapacity.  How  far  this  custom  extends  it  is  impossible 
to  determine,  but  correspondence  proves  that  it  is  quite  wide 
and  rapidly  growing.  One  example  may  be  cited.  In  the 
state  of  Michigan  during  the  year  1905,  according  to  the 
report  of  the  Bureau  of  Industrial  Statistics,  reports  were 
secured  on  this  subject  in  relation  to  more  than  400  cases  of 
accidents  in  factories  and  workshops  in  the  state.  The 
average  duration  of  disability  was  33  days.  Out  of  348 
injured  workmen  172  of  them  received  their  wages  during 
the  time  of  disability.10  Only  in  part  is  this  beneficent  action 
due  to  purely  philanthropic  motives;  probably  we  must 
suppose  the  constant  pressure  of  fear  of  damage  suits  on 
the  part  of  employees  urged  on  by  lawyers  in  quest  of  con- 
tingent fees.  As  quickly  as  possible  after  an  accident  the 
representatives  of  the  firm  visit  the  wounded  man,  show 

10  Twenty-third  Annual  Report  of  the  Labor  and  Industrial  Statistics 
of  Michigan,  1906. 


138  INDUSTRIAL  INSURANCE 

him  kindly  attention,  provide  for  urgent  needs,  or  send 
him  to  a  hospital.  In  due  time,  not  always  immediately 
upon  the  heels  of  the  conciliating  gift,  comes  the  legal  agent 
of  the  firm  with  a  document  for  the  employee  to  sign  giving 
a  full  release  from  all  liability  in  consequence  of  any  possible 
neglect  on  the  part  of  the  employers.  As  a  rule  there  is 
no  legal  claim,  and  the  contribution  is  a  pure  gratuity,  but 
experience  shows  that  such  "smart  money"  has  a  soothing 
and  conciliatory  effect  upon  the  mind  of  the  injured  man. 
Furthermore  there  is  economic  advantage  in  securing 
prompt  surgical  and  medical  care,  because  the  chances  of 
certain  and  speedy  recovery  of  a  wounded  workman  are 
increased  by  such  measures.  Of  course  the  employee  profits 
by  the  custom.  But  he  has  no  legal  claim,  and  the  charity 
feature  is  objectionable  and  irritating. 

The  establishment  of  benefit  clubs  in  factories  and  shops, 
with  or  without  subsidies  from  the  employers,  as  described 
in  another  chapter,  is  often  largely  due  to  the  natural  and 
proper  desire  of  employers  to  avoid  the  irritation  which 
increases  friction  and  so  litigation.  Here  also  the  percep- 
tion of  the  value  of  timely  and  competent  medical  care  in 
restoring  and  conserving  the  industrial  efficiency  of  workers 
has  much  to  do  with  the  favorable  attitude  toward  such 
organizations.  The  humane  motive  must  also  have  its  place. 
It  has  been  asserted,  though  without  adequate  data  for 
proof,  that  many  of  the  great  railroads  and  other  corpora- 
tions already,  and  without  legal  requirement,  pay  out  in 
benefits  to  wounded  workmen  all  that  they  would  be  required 
to  do  under  the  British  Compensation  Act.  All  of  these 
facts  go  to  show  that,  under  the  liability  law,  the  cost  and 
burden  of  insurance  is  already  quite  heavy  on  employers, 
and  that  the  burden  would  for  many  of  them  not  be  greatly 
increased  if  the  compulsory  insurance  of  workingmen  were 
at  once  introduced.  But  the  measures  just  described  are 


THE  EMPLOYERS'  LIABILITY  LAW  139 

without  true  legal  authority  and  are  for  this  reason  not 
socially  equal  nor  fairly  distributed.  It  is  natural  that  some 
more  satisfactory  legal  method  should  be  sought. 

V.    THE  MASSACHUSETTS  BILL 

On  January  13,  1904,  a  very  competent  committee  rec- 
ommended to  the  legislature  of  Massachusetts  a  modified 
form  of  the  British  Compensation  Act  of  1897.  The  legis- 
lature had,  on  June  5,  1903,  instructed  the  governor  to 
appoint  this  committee  of  five  persons  to  make  recommenda- 
tions for  laws  on  the  relations  between  employer  and 
employee.  The  text  of  the  bill  offered  by  them  was  printed 
in  their  report.  This  bill  was  rejected  and  nothing  was 
done,  and  yet  the  discussion  thus  awakened  served  an  im- 
portant educational  purpose  and  public  opinion  was  strongly 
directed  to  the  problem. 

Serious  and  perhaps  insurmountable  legal  objections 
have  been  urged  against  this  bill.  The  proposed  law  has 
been  summarized  and  criticized  very  clearly  and  strongly 
by  Professor  E.  Freund: 

The  bill  makes  every  employer  belonging  to  one  of  the  classes 
specified  by  it  liable  for  any  personal  injury  happening  to  an  employee 
while  performing  duties  growing  out  of  or  incidental  to  his  employ- 
ment, unless  the  injury  is  due  to  the  employee's  own  wilful  or  fraudu- 
lent misconduct.  The  employment  must  be  on,  or  in,  or  about  a 
railroad,  a  street  railway,  a  factory,  a  workshop,  a  warehouse,  a  mine, 
a  quarry,  engineering  work,  or  any  building  which  is  being  con- 
structed, repaired,  altered,  or  improved  by  means  of  a  scaffolding, 
temporary  staging  or  ladder,  or  being  demolished,  or  on  which 
machinery  driven  by  steam,  water,  or  other  mechanical  power  is  being 
used  for  the  purpose  of  the  construction,  repair,  or  demolition  thereof. 
The  act  provides  for  the  payment  of  lump  sums  in  case  of  death, 
and- for  weekly  payments  in  case  of  total  or  partial  incapacity.  Maxi- 
mum amounts  are  fixed,  and  the  weekly  payments  are  subject  to 
review  from  time  to  time.  All  questions  arising  under  the  act  as  to 
liability  to  pay,  or  amount  or  duration  of  compensation,  are  to  be 


14°  INDUSTRIAL  INSURANCE 

settled  by  arbitration.  The  employee  has  his  option  to  proceed  inde- 
pendently of  the  act.  to  recover  damages,  where  he  has  a  cause  of 
action  by  common  law  or  by  other  statutes.11 

Professor  Freund  and  others  have  raised  the  following 
constitutional  objections  to  this  form  of  law:  (a)  The  bill 
makes  no  provision  for  trial  by  jury,  leaving  the  settlement 
in  disputed  questions  to  arbitration;  (&')  There  seems  to  be 
no  principle  of  classification  in  determining  the  occupations 
included  in  the  bill  or  excluded  from  its  operations;  (c)  It 
is  objected  that  this  bill  lays  an  unjust  and  intolerable  bur- 
den on  the  employer  of  small  means  and  income,  making 
his  liability  absolute  although  his  ability  to  meet  the  demand 
in  case  of  serious  accident  is  not  comparable  with  that  of 
rich  corporations.  All  these  errors  can  be  corrected  in  a 
revised  bill.  "The  necessary  provision  for  jury  trial  would 
probably  not  seriously  interfere  with  the  operation  of  the 
act;  a  more  intelligible  principle  of  selection  of  employ- 
ments could  easily  be  found;  and,  above  all,  employers  on 
a  small  scale  should  be  relieved." 

A  somewhat  different  line  of  objections  has  been  brought 
forward  by  other  legal  authorities.  Thus  it  has  been  at- 
tacked on  the  ground  that  it  is  class  legislation  and  casts 
upon  employers  of  certain  selected  classes  a  burden  not  im- 
posed on  others.  In  proof  and  illustration  of  this  contention 
the  decision  of  the  Supreme  Court  of  Illinois  is  cited : 

Liberty,  as  that  term  is  used  in  the  constitution,  means  not  only 
freedom  of  the  citizen  from  servitude  and  restraint,  but  is  deemed  to 
embrace  the  right  of  every  man  to  be  free  in  the  use  of  his  powers 
and  faculties  and  to  adopt  and  pursue  such  avocation  or  calling  as  he 
may  choose,  subject  only  to  the  restraints  necessary  to  secure  the 
common  welfare.12 

11  Green  Bag,  February,  1907,  pp.  80  ff. 

"Braceville  Coal  Co.  vs.  People,  147  111.,  660;  Bassette  vs.  the  People, 
193  111.,  344;  Powell  vs.  Pennsylvania,  127  U.  S.,  678;  Allgeyer  vs.  La., 
165  U.  S.,  578. 


THE  EMPLOYERS'  LIABILITY  LAW  141 

These  cases  show  that  legislative  enactment  cannot 
deprive  a  man  of  his  right  to  pursue  his  calling  in  his  own 
way  so  long  as  he  does  not  encroach  upon  the  rights  of 
others.  As  an  exampfe  the  case  is  cited  where  a  statute 
prohibiting  contractors  to  allow  their  employees  to  work 
more  than  eight  hours  a  day  on  public  work  was  held  un- 
constitutional.13 It  is  affirmed,  in  the  same  course  of  argu- 
ment, that  the  police  power  of  the  state  cannot  be  made  to 
cover  legislation  not  necessary  to  the  health  and  safety  or 
welfare  of  the  community.  One  might  be  justified  in  reply- 
ing to  this  argument  that  it  is  precisely  the  health,  preserva- 
tion, and  welfare  of  the  people  which  is  the  object  of  this 
legislation. 

Another  objection  to  the  compensation  law  is  based  on 
the  idea  that,  if  its  enactment  meant  the  repeal  of  the  right 
to  secure  redress  for  injury  due  to  the  employers'  negligence, 
it  would  be  unconstitutional  because  it  would  deprive  the 
employee  of  a  remedy  which  he  now  has  under  the  common 
law.  This  form  of  the  argument  has  much  weight  with 
employees  and  hinders  the  progress  of  progressive  legisla- 
tion in  the  direction  of  insurance.  It  would  be  amusing  if 
it  were  not  so  tragically  serious  to  hear  what  legal  principle 
is  quoted  in  this  connection;  the  splendid  periods  of  the 
Bill  of  Rights  are  introduced  to  give  solemn  weight  to  the 
argument  for  the  common  law  as  against  modern  insurance 
laws  which  offer  a  vastly  more  adequate  remedy  not  only 
in  case  of  negligence  but  in  all  cases  of  accidents.  It  sounds 
like  sarcasm  to  quote  these  words  and  then  bring  them  into 
connection  with  the  daily  facts  of  life  in  any  industrial  city 
of  this  country.  The  fundamental  ethical  principle  is 
indeed  worthily  expressed : 

Every  person  ought  to  find  a  certain  remedy  in  the  laws  for  all 
injuries  and  wrongs  which  he  may  receive  in  his  person,  property,  or 
13  Bailey  vs.  the  People,  190  111.,  28. 


142  INDUSTRIAL  INSURANCE 

reputation.  He  ought  to  obtain  it  by  law,  right,  and  justice  freely 
and  without  being  obliged  to  purchase  it,  completely  and  without 
denial,  promptly,  and  without  delay. 

This  is  the  sublime  doctrine  of  our  law;  but  what  is  the 
brute  fact  familiar  to  the  very  judges  who  cite  these  sonor- 
ous phrases  in  instructing  juries  and  rendering  awards? 
Every  one  of  them  knows,  and  many  of  them  confess  with 
shame,  that  the  actual  working  of  the  law  is  in  constant 
and  notorious  contradiction  with  every  phrase;  in  practice 
there  is  burdensome  cost  to  the  workman  who  sues,  and  he 
must  pay  his  attorney  perhaps  half  of  the  award  to  conduct 
his  suit;  the  delay  leaves  the  disabled  man  for  at  least  two 
years  without  resources,  although  the  law  gives  him  a  right 
to  instant  succor;  the  issue  is  not  certain,  but  a  mere  gam- 
bler's chance;  and  in  the  vast  majority  of  cases,  that  is 
those  not  traceable  to  negligence  of  the  employer,  yet  due  to 
the  occupation  itself,  the  workman  has  not  even  the  promise 
of  legal  relief.  The  situation  has  a  natural  tendency  to 
make  every  workman  regard  laws  and  courts  as  his  natural 
enemies,  and  this  has  really  been  the  effect,  until  there  is 
positive  hostility  to  these  salutary  institutions.  There  is  no 
cure  for  this  hostility  in  quotations  from  venerable  docu- 
ments to  which  actual  experience  gives  the  lie  direct. 

Beneath  the  juristic  objections  are  certain  economic 
difficulties  which  give  meaning  to  the  legal  criticism  of  the 
compensation  or  absolute  liability  principle.  These  objec- 
tions were  successfully  urged  by  the  manufacturers  of 
Massachusetts  and  were  influential  in  the  defeat  of  the  bill 
before  the  legislature.  In  the  United  States  there  is  entire 
freedom  of  trade  between  states  and  competition  is  unre- 
stricted by  state  barriers.  The  employers,  assuming  that 
the  cost  of  insurance  is  a  financial  burden  or  that  compensa- 
tion without  reference  to  negligence  would  be,  declare  that 
the  premiums  for  insurance  would  handicap  the  employers 


THE  EMPLOYERS'  LIABILITY  LAW  143 

of  the  state  which  should  adopt  the  law  in  their  competition 
with  employers  in  similar  lines  in  other  states.  It  is  difficult 
to  prove  that  this  objection  is  without  weight.  Elsewhere 
the  various  aspects  of  this  problem  are  considered,  but  the 
difficulty  if  not  impossibility  of  securing  national  and 
thereby  uniform  and  equal  requirements  makes  a  satis- 
factory solution  very  remote. 

VI.    EFFORTS  TO   FIND  A  WAY  OUT 

There  are  some  encouraging  aspects  of  the  situation.  It 
will  still  be  possible,  undc*  judicial  rulings,  to  make  insur- 
ance contracts  of  a  certain  kind  which  may  develop  a  system 
of  voluntary  protection  much  more  satisfactory  than  any- 
thing yet  known.  It  is  quite  clear  that  an  employer 
under  the  law  may  make  a  contract  with  his  employees 
which  will  release  him  from  common  law  liabilities  in  cases 
where  the  injured  employee  accepts  the  terms  after  the 
accident.  But  it  is  not  yet  clear  that  an  employee  can  con- 
tract out  of  his  rights  as  a  condition  of  employment  or  even 
in  advance  of  actual  injury.14  Insurance  arrangements  of 
the  relief  departments  of  the  railroad  companies  are  on  the 
basis  of  these  legal  principles.  In  the  bill  offered  by  the 
Industrial  Insurance  Commission  of  Illinois  in  1907  another 
method  was  recommended :  to  offer  to  employers  who  would 
contribute  at  least  half  the  cost  of  accident  insurance  im- 
munity from  all  other  liabilities,  in  case  they  could  induce 
their  employees  to  sign  a  contract  to  accept  these  terms.  It 
was  thought  by  the  commission  that  the  freedom  from  un- 
certain liabilities  and  danger  of  vexatious  and  costly  litiga- 
tion would  be  inducement  enough  for  most  important 
employers  to  adopt  this  course  without  further  legal  con- 
straint. On  the  other  hand  it  was  hoped  that  the  employees 
would  see  it  to  be  to  their  interest  to  agree  to  such  a  contract 

"See  77  N.  E.  Rep.,  p.  248;   169  111.,  312. 


144  INDUSTRIAL  INSURANCE 

since  they  would  thus  be  assured  of  a  certain  indemnity  or 
benefit  in  all  cases  of  injury,  whether  there  was  show  of 
cause  under  the  plea  of  negligence  or  not,  and  thus  they 
would  have  absolute  protection  in  all  forms  of  disability 
without  losing  employment  and  without  paying  half  or 
more  of  rare  awards  for  lawyers'  fees.  It  is  not  yet  known 
whether  the  employees  will  take  this  view  of  the  matter,  nor 
what  the  legislature  will  do,  nor  what  the  courts  would  do 
in  case  a  law  of  this  kind  were  put  to  test.  But  the  Com- 
mission was  advised  by  some  of  the  most  competent  auth- 
orities in  the  country  that  the  essential  features  of  the  bill 
were  legally  and  actuarially,  sound  and  would,  if  accepted 
in  good  faith,  relieve  the  situation  and  be  a  substantial 
benefit  to  employers,  employees  and  to  the  general  public.^ 
If  this  is  true  the  idea  will  yet  be  tried  in  some  states  and 
have  a  chance  to  prove  its  worth.  The  Illinois  bill  left  the 
method  of  insurance  optional  with  the  contracting  parties, 
that  is  with  the  employers ;  and  the  employer  might  select  a 
casualty  company  to  provide  the  machinery  for  protection, 
or  might  under  suitable  conditions  create  his  own  insurance 
fund,  or  might  join  with  others  in  the  formation  of  a  mutual 
insurance  association.  It  would  be  unwise  to  exclude 
casualty  companies  from  this  business  in  the  present  situa- 
tion and  equally  unwise  to  give  them  a  monopoly  of  the 
business. 

In  the  year  1899  an  effort  was  made  in  New  York  to 
introduce  some  insurance  measure,  but  it  failed  on  account 
of  the  contemporaneous  demand  for  more  stringent  liability 
law.  The  bill  offered  included  the  British  principle  .of 
absolute  liability  and  compensation  in  all  kinds  of  acci- 
dents.15 

In  the  year  1902  Senator  David  J.  Lewis  introduced  into 
the  legislature  of  Maryland  a  bill  intended  to  encourage  or 

15  See  article  of  M.  M.  Dawson  in  Railway  Age,  1904,  p.  415. 


THE  EMPLOYERS'  LIABILITY  LAW  145 

practically  compel  employers  to  provide  insurance  for  their 
employees  in  certain  dangerous  occupations.  There  was  in 
the  law  a  drastic  provision  extending  the  scope  of  liability, 
and  then  the  employer  was  permitted  to  avoid  this  liability 
by  paying  given  sums  to  the  State  Insurance  Commissioner 
for  the  creation  of  a  fund  out  of  which  a  death  indemnity 
for  a  thousand  dollars  should  be  paid.  The  law  was  passed 
and  a  number  of  death  benefits  were  paid  out  by  the  Insur- 
ance Commissioner.  It  was  declared  unconstitutional  in  an 
inferior  court  on  the  ground  that  the  law  gave  judicial 
powers  to  an  administrative  officer.  No  case  has  been 
carried  up  to  the  Court  of  Appeals  and  the  final  test  has 
not  been  applied.  The  author  of  the  bill  thinks  that  the 
indifference  of  employers  to  the  law  was  due  to  the  fact 
that  the  number  of  cases  attributable  to  negligence  is  so 
small  that  freedom  from  liability  under  that  clause  is  not 
sufficient  motive  to  induce  them  to  go  to  the  trouble  to 
insure  their  employees. 

In  the  meantime  it  is  interesting  to  study  the  growth  and 
advance  of  instructed  minds  on  this  subject  as  illustrated 
in  various  messages  of  President  Roosevelt.  He  seems  to 
have  uttered  his  first  plea  in  connection  with  an  urgent 
request  to  Congress  to  grant  disability  and  old-age  pen- 
sions to  members  of  the  life-saving  crews  along  the  rivers 
and  coasts.  In  his  message  of  December  3,  1906,  he  goes 
farther  and  reaches  the  ground  of  the  British  compensation 
act  of  1897: 

Among  the  excellent  laws  which  the  congress  passed  at  the  last 
session  was  an  employers'  liability  law.16  It  was  a  marked  step  in 

16  This  law  has  been  declared  unconstitutional  by  two  courts  and 
affirmed  by  one  federal  court.  Judge  Evans,  in  Kentucky,  in  re  United 
States  vs.  J.  M.  Scott,  1906,  declared  adversely.  A  case  was  carried  up 
to  the  Supreme  Court  and  by  a  small  majority  the  law  was  declared 
unconstitutional  on  a  mere  technicality.  Subsequently  congress  enacted 
an  amended  form  of  the  law  and  the  President  signed  it.  See  Appendices 
B  and  C. 


146  INDUSTRIAL  INSURANCE 

advance  to  get  the  recognition  of  employers'  liability  on  the  statute 
books,  but  the  law  did  not  go  far  enough.  In  spite  of  all  precautions 
exercised  by  employers  there  are  unavoidable  accidents  and  even 
deaths  involved  in  nearly  every  line  of  business  connected  with  the 
mechanic  arts.  This  inevitable  sacrifice  of  life  may  be  reduced  to  a 
minimum,  but  it  cannot  be  completely  eliminated.  It  is  a  great  social 
injustice  to  compel  the  employee,  or  rather  the  family  of  the  killed  or 
disabled  victim,  to  bear  the  entire  burden  of  an  inevitable  sacrifice. 
In  other  words,  society  shirks  its  duty  by  laying  the  whole  cost  on  the 
victim,  whereas  the  injury  comes  from  what  may  be  called  the  legiti- 
mate risks  of  the  trade.  Compensation  for  accidents  or  deaths  due 
in  any  line  of  industry  to  the  actual  conditions  under  which  that 
industry  is  carried  on  should  be  paid  by  that  portion  of  the  community 
for  the  benefit  of  which  the  industry  is  carried  on — that  is,  by  those 
who  profit  by  the  industry.  If  the  entire  trade  risk  ia  placed  upon  the 
employer  he  will  promptly  and  properly  add  it  to  the  legitimate  cost 
of  the  production  and  assess  it  proportionately  upon  the  consumers  of 
his  commodity.  It  is  therefore  clear  to  my  mind  that  the  law  should 
place  this  entire  risk  of  trade  upon  the  employer.  Neither  the  federal 
law  nor,  as  far  as  I  am  informed,  the  state  laws  dealing  with  the 
question  of  employers'  liability  are  sufficiently  thoroughgoing. 

Still  more  recently  in  a  speech  at  the  Jamestown  Expo- 
sition, June  n,  1907,  President  Roosevelt  has  been  even 
more  explicit  and  published  the  opinions  which  no  doubt 
have  long  been  waiting  in  his  fertile  mind  for  the  right 
moment  for  utterance  in  a  responsible  way:  "Workmen 
should  receive  a  certain  definite  and  limited  compensation 
for  all  accidents  in  industry,  irrespective  of  negligence." 
This  doctrine  he  would  have  Congress  apply  at  once  in 
statutes  governing  railroads;  no  doubt  with  the  hope  that 
state  legislatures  would  speedily  follow  the  example  set  by 
the  federal  legislature. 

On  May  30,  1908,  President  Roosevelt  had  the  satisfac- 
tion of  approving  a  bill  which,  for  the  first  time  in  our 
history,  distinctly  and  fully  recognizes  in  law  the  moral  obli- 
gation of  the  state  to  provide  compensation  for  injuries  due 
to  the  hazard  of  occupation;  it  is  H.  R.  21844,  "An  Act 


THE  EMPLOYERS'  LIABILITY  LAW  147 

granting  to  certain  employees  of  the  United  States  the  right 
to  receive  from  it  compensation  for  injuries  sustained  in  the 
course  of  their  employment."  (See  the  text  in  Appendix  C.) 
The  genial  and  humane  manufacturer  and  politician, 
Mayor  S.  M.  Jones  of  Toledo,  "Golden  Rule  Jones,"  is 
quoted  as  follows : 

Whenever  a  crank-shaft,  a  gear,  a  pinion,  or  any  part  of  a 
machine  is  broken,  it  must  be  replaced.  When  a  machine  is  worn  out 
and  a  new  one  must  take  its  place,  the  expense  of  these  repairs  and 
replacements,  of  course,  is  charged  to  the  business.  That  is  figured 
as  a  part  of  the  cost  of  carrying  on  the  business. 

To  a  very  great  extent  a  man  has  been  looked  upon  as  of  less 
importance  than  a  machine.  Men  by  the  thousands  are  annually 
maimed,  crippled,  disfigured,  and  killed  in  the  service  of  the  fac- 
tories, shops,  mills,  and  railways  of  the  United  States  with  scarcely 
a  thought  being  given  to  the  subject  of  making  good  the  injury,  and 
the  rule  is  that  the  poor  man  who  has  lost  a  finger,  a  hand,  an  eye, 
an  arm,  or  a  leg,  when  by  reason  of  these  defects  he  is  no  longer 
useful,  is  turned  out  to  shift  for  himself,  and  very  often  both  he  and 
his  family  are  made  dependent  upon  the  public  charities  for  a  liveli- 
hood  If  a  business  must  provide  margin  enough  to  repair 

broken  and  renew  worn-out  ones,  why  should  it  not  provide  for  a 
broken  leg,  a  crushed  foot  or  hand,  by  paying  to  such  injured  person 
his  regular  wages  during  the  time  of  his  enforced  suffering  and 
idleness?  And  when  the  breadwinner  of  a  family  is  killed,  why 
should  not  the  business  that  killed  him  take  the  place  of  the  bread- 
winner as  far  as  possible  by  providing  for  the  material  wants  of  the 
family  that  was  dependent  upon  him?  ....  I  believe  that  business 
should  provide  for  such  emergencies;  and  furthermore,  that  as  we 
become  humanized  it  will  be  considered  a  legitimate  part  of  the 
necessary  expense  of  carrying  on  any  business." 

At  this  point  we  may  well  consider  the  argument  and 
recommendations  of  the  Bureau  of  Labor  and  Industrial 
Statistics  of  Wisconsin  (Report  of  1908,  pp.  105  ff.)  :  The 
cost  of  the  existing  system  to  the  employer  varies  with  the 
industry  but  averages  from  five-tenths  to  six-tenths  of  i 

17  Machinists'  Monthly  Journal,  February,  1904,  p.   113. 


148  INDUSTRIAL  INSURANCE 

per  cent,  on  the  wage  bill  and  from  $2.50  to  $2.80  per  man 
per  annum.  This  is  chiefly  for  liability  insurance  premiums. 
Less  than  half  of  this  money  reaches  the  victims  of  accident. 
The  board  recommends  the  following  principle : 

Let  the  employer  contribute  an  amount  which  he  probably  would 
have  to  pay  if  he  continued  with  the  law  of  negligence,  release  him 
from  liability  to  damage  suits,  and  then  distribute  that  money  on  the 
insurance  principle,  the  employee  being  encouraged  to  carry  as  much 
additional  insurance  as  he  could.  ' 

This  is  essentially  the  recommendation  of  the  Illinois  Com- 
mission. 


CHAPTER  VI 

PRIVATE  INSURANCE  COMPANIES 
I.    INDUSTRIAL  LIFE  INSURANCE 

The  purpose  of  these  companies,  from  the  standpoint 
of  directors  and  stockholders,  is  profit;  their  social  end  is 
to  secure  for  the  policy-holders  a  certain  sum  to  provide 
for  the  expenses  of  mortal  illness  and  for  burial  without 
appeal  to  charity.  Some  of  these  same  corporations  carry 
on  an  ordinary  life-insurance  business  which  does  not  in 
any  important  factor  differ  from  other  life-insurance  agen- 
cies, and  does  not  require  special  attention  in  this  place.1 

The  vast  importance  and  extent  of  the  business  of  these 
burial  insurance  companies  may  be  indicated  by  their  statis- 
tics. In  a  previous  part  of  this  discussion  the  principal  facts 
have  been  cited.  The  face  promise  of  all  policies  of  indus- 
trial companies  in  the  year  1902  was  $1,806,890,864.  The 
number  of  policies  was  13,448,124,  and  the  average  value 
of  the  policies  was  $135.  Mr.  Dryden  estimated  that  the 

1  References :  Frederick  L.  Hoffman,  History  of  the  Prudential  Insur- 
ance Company  of  America,  1875-1900;  Handbook  and  Reference  Guide  to 
the  Exhibits  of  the  Prudential  Insurance  Company  of  America,  prepared 
for  the  Louisiana  Purchase  Exposition,  St.  Louis,  1904;  John  F.  Dryden, 
The  Inception  and  Early  Problems  of  Industrial  Insurance,  1905  ;  Descrip- 
tion of  Ordinary  Policies  of  the  various  companies ;  article  on  "Industrial 
Insurance,"  Encyclopedia  Americana,  by  Haley  Fiske,  vice-president  of  the 
Metropolitan  Life  Insurance  Company;  Haley  Fiske,  Testimony  before 
the  Legislative  Investigating  Committee  of  New  York,  1905 ;  H.  Fiske, 
"Profits  of  Industrial  Insurance,"  United  States  Review,  thirtieth  anni- 
versary number;  H.  Fiske,  "Industrial  Insurance,"  Charities  Review, 
March,  1898;  Memorandum  submitted  on  behalf  of  the  Metropolitan  Insur- 
ance Company,  respecting  the  proposed  insurance  bills,  New  York,  1906; 
W.  A.  Fricke,  Insurance,  1898,  pp.  212-77  (article  by  John  R.  Hegemann, 
president  of  Metropolitan  Life  Insurance  Co.). 

149 


150  INDUSTRIAL  INSURANCE 

companies  distributed  annually  to  their  beneficiaries  more 
than  $20,000,000  in  burial  benefits. 

The  burden  of  this  enormous  business  is  heavy  and  is 
borne  exclusively  by  members  of  the  wage-earning  groups, 
and  especially  by  those  whose  wages  are  lowest  or  next  to 
the  lowest.  This  expense  has  come  to  be  regarded  in  this 
country  as  a  necessary  part  of  the  weekly  budget.  There 
prevails  among  the  people  of  our  cities,  among  immigrants 
as  well  as  among  native  born,  a  strong  feeling  against 
"pauper  burials,"  and  this  sentiment  is  quickened  and  stimu- 
lated by  the  persuasions  and  representations  of  the  numerous 
agents  of  the  industrial  insurance  companies;  it  is  their 
stock  in  trade.  According  to  Hoffman2  the  average  policy 
in  that  company  in  1899  was  for  $114.22.  The  entire  pay- 
ments of  premiums  into  the  treasury  of  this  company  in 
1899  amounted  to  the  sum  of  $19,028,792,  and  the  payments 
of  benefits  to  $5,426,545.  The  entire  receipts  from  the 
beginning  to  the  year  1899  were  $120,505,542,  and  the  pay- 
ments of  burial  benefits  $39,901,006.  The  ratio  of  cost  of 
administration  to  income  was  39.17  per  cent.,  as  compared 
with  17.34  per  cent,  in  the  ordinary  life-insurance  com- 
panies. At  first  sight  this  contrast  is  so  startling,  and  the 
difference  of  cost  so  great  as  to  raise  a  suspicion  of  foul 
play.  But  further  analysis  mitigates  the  severity  of  judg- 
ment, although  it  may  lead  us  to  dislike  the  system  even 
more  than  before.  (The  figures  may  be  found  in  the  Stand- 
ard of  September  17,  1898,  pp.  3141!.,  as  given  by  Mr. 
J.  R.  Hegemann,  president  of  the  Metropolitan  Life  Insur- 
ance Company.)  In  Statistics,  Fraternal  Societies,  1905,  p. 
213,  the  editor  asserts  that  in  twenty-five  of  the  ordinary 
life-insurance  companies  the  ratio  of  administrative  ex- 
penses to  premiums  was  18.3  per  cent,  (varying  from  10.4 

2  History  of  the  Prudential  Insurance  Co.,  p.  289. 


PRIVATE  INSURANCE  COMPANIES  151 

to  31.7  per  cent.) ;  while  in  twenty-five  fraternal  societies 
the  cost  was  on  the  average  only  8.4  per  cent. 

The  explanation  of  the  difference  and  of  the  enormous 
burden  which  falls  upon  the  poor  insurers  is  given  by  the 
administrators  of  the  industrial  companies  themselves,  at 
least  in  part.  Of  the  cost  for  salaries  and  the  amounts 
absorbed  by  profits  of  directors  and  stockholders  we  must 
learn  elsewhere,  but  of  the  chief  facts  they  make  clear  dis- 
closure. One  of  the  factors  in  explanation  is  the  small  size 
of  the  poor  man's  policy,  as  compared  with  that  of  the  rich 
man.  The  average  policy  in  ordinary  companies  is  $2,468, 
while  that  in  industrial  companies  is  only  $142,  and  that  of 
the  weekly  payment  plan  is  much  lower  still.  The  industrial 
company  must  write  at  least  eighteen  policies  to  make  the 
sum  of  one  policy  in  ordinary  insurance.  In  connection 
with  each  of  these  little  policies  visits  must  be  made  to 
solicit  and  write  the  policies;  each  policy  must  be  carefully 
examined  by  experts,  immense  correspondence  must  be 
carried  on  from  the  central  office  with  agents  all  over  the 
land,  the  payments  of  premiums  demand  time  and  expense, 
the  accounts  must  be  kept  with  each  policy  holder  and  each 
agent,  and  the  medical  examinations  also  call  for  heavy 
payments.  It  is  estimated  that  the  agents  of  these  companies 
must  make  in  the  United  States  annually  more  than  416,- 
000,000  visits  in  homes,  or  about  1,328,000  each  week  day. 
To  these  causes  of  expense  we  must  in  fairness  add  the  fact 
that  the  rate  of  mortality  among  working  people  is  much 
higher  than  among  the  members  of  the  well-fed,  comfort- 
able classes,  and  this  makes  the  cost  of  insurance  higher. 
The  habits  of  life  of  many  working-people,  their  unsanitary 
homes,  inadequate  or  improper  food,  hard  and  monotonous 
labor  often  at  depressing  tasks,  close  confinement,  and  occa- 
sionally inherited  defects,  all  have  a  bearing  on  death  rates 


INDUSTRIAL  INSURANCE 


and  hence  on  premiums  which  must  be  charged  to  cover 
risks.  The  table  shows  the  relative  rates  of  mortality  ac- 
cording to  Farr's  English  Life  Table,  based  on  the  general 
population  of  Great  Britain;  the  Actuaries'  Table,  based  on 
the  combined  experience  of  seventeen  English  companies; 
and  the  table  based  on  the  experience  of  12,000,000  insured 
lives  with  the  Metropolitan  Life  Insurance  Company. 

TABLE  I 


Age 

Deaths  per  1,000 
(Farr) 

Actuaries 

Metropolitan 

20 

774 

21 

8  46 

•  •*:) 

25  

35  
45  

%  

9.24 
11.24 
14.50 
21-75 

4.1    2O 

•06 
7.72 
9.19 

n-95 
20.99 

A  0       At 

14.14 
17-15 

22.  56 

35-22 

70  . 

60  80 

'  62    cfl 

yu.  yy 

The  actual  premiums  paid  in  the  industrial  companies 
are  set  forth  in  their  tables,  and  typical  tables  are  here 
reproduced. 

Value  of  industrial  insurance. — We  may  freely  admit 
that  the  claim  of  the  companies  that  they  offer  real  benefits 
to  low-paid  workmen  has  considerable  foundation  in  fact, 
and  they  are  entitled  to  consideration.  It  is  incredible  that 
such  a  vast  business  should  rest  upon  unmitigated  falsehood 
and  injustice.  The  companies  are  right  in  their  claim  that 
no  considerable  number  of  workmen  of  this  level  will  volun- 
tarily insure,  even  if  rates  are  low,  and  that  solicitation  by 
agents  is  costly  and  the  expense  must  be  charged  in  the 
premiums.  They  are  right  in  claiming  that  the  benefits  have 
often  spared  the  poor  family  the  shame  of  a  pauper  funeral ; 
that  family  feeling  and  affection  are  fostered;  that  a  spirit 
of  independence  and  seif-respect  is  maintained;  and  these 


PRIVATE  INSURANCE  COMPANIES 


153 


TABLE  II 

INDUSTRIAL  INSURANCE  OF  THE  INSURANCE  COMPANIES 
Industrial  Life  Insurance,  Its  History,  Statistics,  and  Plans  [1905],  pp.  59  ff.) 
BALTIMORE  LIFE,  BALTIMORE,  MD. 


POLICIES  IN  FORCE 

YE« 

NEW  POLICIES 
IN  THIS  YEAB 

PREMIUMS 
RECEIVED 

PAYMENTS 

Number 

Amount 

1904 

$4,548,840 

I03,965 

$7,977,954 

$592,777 

$108,545 

1903 

4,969iiS2 

105,587 

7,770,477 

596,472 

96,731 

1902 

5»7a3»"8 

100,292 

7,133,760 

565,871 

71,345 

1901 

5,774,038 

100,714 

6,529,9I3 

544,309 

68,429 

1900 

5,354,140 

92,310 

5,642,853 

523,785 

54,921 

1899 

4,486,212 

86,061 

5,038,963 

467,880 

47,599 

1898 

4,45I>355 

76,974 

4,251,905 

421,496 

39,879 

COLONIAL,  JERSEY  CITY,  N.  J. 


1904 

$8,784,984 

83,690 

$9,781,317 

$454,807 

$H5,554 

1903 

7,122,800 

70,076 

8,028,103 

364,588 

86,855 

1902 

6,454,644 

55,597 

6,149,410 

282,093 

69,871 

1901 

5,211,301 

43,52o 

4,668,763 

203,454 

50,676 

1900 

4,209,047 

34,674 

3,650,629 

152,501 

39,501 

1899 

4,042,526 

27,697 

2,854,075 

85,252 

15,900 

1898 

2,719,798 

10,623 

1,423,482 

23,626 

4,221 

COLUMBIAN  NATIONAL,  BOSTON 


1904 
1903 

1902 

$9,468,216 
4,813,941 
759,640 

40,397 
18,756 
4,275 

$5,532,978 
2,630,959 
6l5,3l6 





CONTENTNEA   LlFE,   WlLSON,    N.  C. 

1903 

$43,980 

798 

$22,360 

$1,283 

$5 

EQUITABLE  INDUSTRIAL,  WASHINGTON,  D.  C. 


1904 

$1,690,736 

25,522 

$2,960,212 

$107,358 

$34,599 

1903 

1,665,414 

23,304 

2,692,699 

95,425 

24,401 

1902 

!,334,923 

20,401 

2,325,483 

58,252 

^  16,458 

HOME,  WILMINGTON,  DEL. 


1903 

$  284,400 

12,948 

$1,691,809 

$49,043 

$14,954 

1902 

1,104,223 

12,842 

1,448,963 

48,487 

15,867 

1901 

1,417,440 

12,132 

1,450,393 

27,770 

8,633 

1900 

^551,079 

5,146 

920,980 

18,523 

6,063 

154 


INDUSTRIAL  INSURANCE 


TABLE  II— Continued 
IMMEDIATE  BENEFIT,  BALTIMORE,  MD. 


POLICIES  IN  FORCE 

YEAR 

NEW  POLICIES 
IN  THIS  YEAR 

PREMIUMS 
RECEIVED 

PAYMENTS 

Number 

Amount 

1904 

$1,233,420 

15,002 

$1,210,675 

$71,432 

$18,086 

1903 

391,268 

10,703 

705,128 

58,857 

16,245 

1902 

421,318 

7,587 

509,131 

54,996 

J4,253 

1901 

44i,3°9 

7,201 

406,849 

44,760 

i4,3J4 

1900 

139,535 

$,*3* 

228,512 

43,763 

14,004 

1899 

1,102,618 

4,481 

195,802 

43,693 

11,241 

1898 

1,488,774 

13,651 

1,006,704 

62,483 

19,991 

1897 

I>520,337 

11,843 

845,954 

38,282 

II>°73 

JOHN  HANCOCK,  BOSTON,  MASS. 


1904 

$61,840,600 

1,474,399 

$233,069,767 

$13,622,350 

$3,97I,33° 

1903 

57,444,640 

1,395,779 

216,375,960 

12,389,529 

3,642,681 

1902 

68,137,409 

1,312,630 

200,294,696 

10,914,984 

2,964,953 

1901 

57,928,751 

1,223,500 

177,597,439 

9,595,301 

2,819,624 

1900 

52,060,760 

i,i52,444 

159,893,856 

8,252,341 

2,554,905 

1899 

44,358,633 

1,069,197 

141,609,904 

7,209,290 

2,193,573 

1898 

37,936,626 

956,382 

124,923,200 

6,512,804 

1,874,015 

1897 

35,959,176 

899,418 

115,750,709 

5,773,*44 

1,684,027 

1896 

36,871,080 

835,35! 

105,640,047 

5,217,207 

1,643,708 

1895 

41,905,652 

771,972 

95,640,574 

4,638,040 

1,428,921 

1894  • 

33,146,067 

681,802 

82,876,338 

3,862,056 

1,213,607 

1893 

34,57J,979 

607,150 

73,043,678 

3,444,3*3 

1,116,124 

1892 

29,326,680 

556,435 

65,428,121 

2,914,498 

1,005,507 

1891 

25,374,745 

476,612 

54,516,514 

2,387,7°! 

932,488 

1890 

23,083,151 

402,147 

45,772,709 

2,002,644 

811,688 

1889 

18,239,650 

320,264 

36,365,419 

1,616,585 

596,5™ 

1888 

15,953,123 

256,574 

29,943,052 

i,3J7,374 

473,843 

1887 

13,334,392 

203,467 

23,802,502 

1,031,845 

357,002 

1886 

10,748,152 

148,850 

17,805,910 

8i5,75o 

306,938 

1885 

7,055,933  , 

107,872 

12,600,935 

647,143 

221,266 

1884 

4,752,613 

80,629 

8,940,275 

547,058 

206,460 

1883  . 

4,085,489 

63,625 

6,730,902 

472,242 

175,438 

1882 

3,718,902 

48,568 

5,096,488 

415,537 

194,053 

1881 

2,931,860 

36,012 

3,787,230 

346,887 

161,606 

1880 

5,483,431 

30,702 

3,139,018 

336,198 

172,570 

1879 

1,275,918 

9,327 

951,000 

294,043 

162,141 

LIFE  INSURANCE  COMPANY  OF  VIRGINIA,  RICHMOND,  VA. 


1904 

$11,788,596 

358,541 

$37,7IO,9°i 

$1,680,411 

$512,105 

1903 

11,906,867 

331,452 

34,503,483 

1,509,463 

434,204 

1902 

12,437,338 

302,839 

30,303,815 

1,338,518 

392,997 

PRIVATE  INSURANCE  COMPANIES 


TABLE  II — Continued 
LIFE  INSURANCE  COMPANY  OF  VIRGINIA,  RICHMOND,  VA. — Continued 


YEAR 

NEW  POLICIES 
IN  THIS  YEAR 

POLICIES  IN  FORCE 

PREMIUMS 
RECEIVED 

PAYMENTS 

Number 

Amount 

1901 

$10,785,037 

266,685 

$26,906,073 

$1,151,213 

$373,419 

1900 

9,102,616 

237,283 

23,239,844 

1,087,272 

370,429 

1899 

8,968,321 

219,679 

20,246,656 

937,901 

308,259 

1898 

12,318,555 

194,95! 

18,373,119 

852,028 

252,025 

1897 

9,212,261 

165,660 

15,264,250 

752,215 

214,273 

1896 

10,613,052 

149,672 

13,778,199 

712,932 

222,987 

I89S 

9,256,579 

116,814 

n,o53,o39 

59i,38i 

162,663 

1894 

8,140,705 

99,618 

9,647,707 

55^794 

160,003 

1893 

6,998,569 

75,!3o 

6,643,061 

546,151 

154,529 

1892 

6,272,217 

69,527 

6,230,224 

475,520 

120,496 

1891 

4,940,820 

5M9* 

4,520,424 

395,i9i 

102,742 

1890 

3,000,115 

32,927 

3,589,720 

234,547 

88,795 

1889 

3,3*4,876 

21,271 

2,536,280 

i5I»57* 

61,697 

1888 

2,619,276 

*5,!93 

!,°76,377 

127,049 

39,29i 

1887 

1,250,000 

10,500 

850,000 

99,556 

60,589 

METROPOLITAN,  NEW  YORK,  N.  Y. 


1904 

$305,258,155 

7,614,729 

$1,127,889,229 

$50,808,924 

$14,826,976 

1903 

297,968,863 

7^87,345 

1,059,875,827 

45,656,961 

12,907,617 

1902 

31  2,990,338 

6,698,291 

981,676,306 

39,653,725 

11,320,967 

1901 

296,606,312 

6,008,662 

881,491,451 

34,705,186 

10,704,747 

1900 

264,737,682 

5,327,067 

768,977,676 

31,210,356 

9,785,624 

1899 

253,396,620 

4,855,756 

688,629,175 

26,591,651 

8,575,134 

1898 

210,508,694 

4,3*7,274 

591,427,272 

23,372,770 

7,691,943 

1897 

232,264,188 

4,028,722 

534,343,756 

21,402,966 

6,990,866 

1896 

169,820,543 

3,643,569 

454,068,004 

19,306,196 

6,963,256 

1895 

175,905,407 

3,458,846 

416,062,194 

18,336,918 

6,580,390 

1894 

294,270,451 

3,559,i65 

423,514,171 

16,827,016 

5,747,823 

1893 

150,057,703 

2,932,064 

343,917,746 

14,361,214 

5>535,I2o 

1892 

127,222,470 

2,7i5,4i4 

305,451,576 

12,511,078 

4,898,382 

1891 

94,927,488 

2,278,487 

254,939,881 

10,830,373 

4,408,379 

1890 

100,852,802 

2,096,595 

231,115,440 

9,390,927 

3,746,478 

1889 

92,726,883 

1,849,113 

200,829,929 

8,342,945 

3,042,818 

1888 

91,242,946 

1,632,642 

176,533,142 

6,810,110 

2,55°,I05 

1887 

84,059,118 

i,345,!25 

147,758,287 

5,618,767 

2,098,936 

1886 

72,783,721 

1,066,875 

119,560,339 

4,438,096 

1,566,514 

1885 

57,819,912 

829,833 

91,234,252 

3,414,524 

1,279,645 

1884 

59,505,421 

670,999 

7^965,635 

2,811,816 

970,590 

1883 

52,505,697 

526,042 

56,536,325 

1,975,703 

631,639 

1882 

36,822,169 

335,789 

34,679,307 

1,246,515 

369,314 

1881 

24,469,300 

190,348 

17,894,620 

859,057 

268,811 

1880 

20,728,700 

110,193 

9,103,870 

568,204 

200,805 

1879 

523,539 

5,143 

516,618 

432,560 

144,421 

156 


INDUSTRIAL  INSURANCE 


TABLE  II— Continued 
MUTUAL  OF  BALTIMORE,  BALTIMORE,  MD. 


YEAR 

NEW  POLICIES 
IN  THIS  YEAR 

POLICIES  IN  FORCE 

PREMIUMS 
RECEIVED 

PAYMENTS 

Number 

Amount 

1904 

$2,016,918 

35,73° 

$  3,559,495 

$207,443 

$84,075 

1903 

,815,548 

32,162 

3,095,453 

188,158 

74,508 

1902 

,684,671 

28,093 

2,641,356 

165,322 

57,I][9 

1901 

,322,112 

23,981 

2,206,081 

147,363 

59,097 

1900 

,217,455 

20,855 

1,872,030 

128,201 

43,822 

1899 

3°°,572 

17,574 

1,526,787 

124,502 

52,243 

1898 

,454,344 

19,015 

1,479,364 

119,286 

44,355 

1897 

,148,486 

14,746 

1,049,638 

101,676 

43,4io 

1896 

55°,OI3 

8,i55 

621,108 

93,47J 

32,192 

1895 

495,226 

5,999 

54i,308 

85,493 

34,423 

1894 

387,993 

4,340 

446,501 

73,225 

3i,792 

1893 

602,196 

2,028 

243,010 

68,565 

25,643 

1892 

440,989 

2,856 

39^856 

62,691 

21,493 

PROVIDENCE  LIFE,  PROVIDENCE,  R.  I. 


1904 

$108,450 

2,OI2 

$301,600 

$  5,!73 

$3,225 

1903 

586,320 

5,509 

761,185 

11,610 

2,163 

1902 

548,840 

4,818 

654,378 

8,107 

1,824 

1901 

514,3*9 

3,683 

517,168 

6,864 

2,164 

1900 

301,270 

i,9i3 

3io,7n 

3,604 

1,215 

1899 

524,886 

663 

224,886 

1,406 

308 

PRUDENTIAL,  NEWARK,  N.  J. 


1904 

$202,524,911 

5,642,335 

$675,992,239 

$41,155,697 

$11,258,506 

1903 

190,386,294 

5,176,456 

6i3,935,910 

36,028,402 

9,812,458 

1902 

184,327,303 

4,692,182 

550,464,265 

31,138,718 

8,096,719 

1901 

191,712,877 

4,290,539 

498,127,133 

26,681,757 

7,411,428 

1900 

182,270,423 

5,908,622 

448,596,996 

22,559,354 

6,207,418 

1899 

165,760,248 

3,406,189 

389,039,257 

19,028,792 

5,420,758 

1898 

121,080,784 

2,924,526 

333,992,200 

16,139,452 

4,749,885 

1897 

112,371,379 

2,658,700 

303,770,952 

14,551,868 

4,342,562 

1896 

108,223,712 

2,437,251 

279,030,638 

13,329,644 

4,158,831 

1895 

124,374,407 

2,330,741 

268,414,100 

11,892,766 

3,846,754 

1894 

205,128,243 

2,256,014 

259,840,927 

10,890,302 

3,!9i,i75 

1893 

128,208,941 

1,941,533 

218,199,566 

9,084,844 

2,893,708 

1892 

92,677,524 

1,653,465 

184,306,206 

7,525,844 

2,518,567 

1891 

72,966,176 

1,360,383 

150,758,907 

6,413,283 

2,079,669 

1890 

95,674,484 

1,228,332 

135,084,498 

5,636,876 

1,749,714 

1889 

73,576,853 

1,099,3!  2 

H7,357,4i5 

4,442,833 

1,327,856 

1888 

58,214,981 

850,064 

92,418,854 

3,659,495 

1,096,234 

1887 

60,202,194 

736,909 

81,694,088 

2,942,257 

853,819 

PRIVATE  INSURANCE  COMPANIES 


157 


TABLE  II— Continued 
PRUDENTIAL,  NEWARK,  N.  J. — Continued 


POLICIES  IN  FORCE 

YEAR 

NEW  POLICIES 
IN  THIS  YEAR 

PREMIUMS 
RECEIVED 

PAYMENTS 

Number 

Amount 

1886 

$49,142,316 

548,433 

$59,328,627 

$2,114,296 

$593,273 

1885 

28,860,882 

422,671 

40,266,445 

1,468,955 

418,622 

1884 

24,892,268 

324,794 

28,545,189 

1,127,738 

322,382 

1883 

20,426,140 

273,917 

23,°53,935 

828,911 

222,083 

1882 

11,541,210 

196,007 

15,738,973 

•    571,595 

157,705 

1881 

9,688,362 

133,582 

10,959,948 

402,947 

111,508 

1880 

8,555,904 

87,462 

7,347,892 

250,958 

57,256 

1879 

3,!57,352 

43,715 

3,866,913 

121,560 

23,013 

1878 

1,785,696 

22,8o8 

2,027,888 

59,817 

",338 

1877 

967,932 

11,226 

I,030,655 

28,517 

5,296 

1876 

727,168 

4,816 

443,072 

14,495 

1,958 

WESTERN  AND  SOUTHERN,  CINCINNATI,  O. 


1904 

$14,830,110 

227,624 

$24,600,187 

$1,249,945 

$354,666 

1903 

14,161,533 

209,623 

22,223,035 

1,113,699 

295,369 

1902 

12,948,340 

184,686 

19,643,480 

917,337 

221,284 

1901 

10,878,524 

155,096 

16,426,534 

722,605 

203,896 

1900 

10,070,944 

131,132 

13,618,878 

614,301 

150,642 

1899 

8,370,729 

"7,545 

10,881,961 

508,900 

122,494 

1898 

7,256,666 

9^589 

8,392,902 

397,687 

96,448 

1897 

4,980,043 

7!,30i 

6,619,653 

320,996 

79,169 

1896 

4,290,332 

62,747 

5,724,728 

298,686 

79,060 

1895 

4,573,492 

56,960 

5,294,38i 

246,807 

69,087 

1894 

6,178,914 

46,362 

4,374,675 

227,392 

52,456 

1893 

3,830,862 

41,296 

3,691,843 

183,415 

44,336 

1892 

2,522,842 

30,472 

2,707,366 

140,564 

39,539 

1891 

2,661,930 

24,638 

2,329,936 

*OI,397 

26,944 

1890 

2,620,328 

16,926 

2,000,073 

70,327 

!9,233 

1889 

2,505,945 

n,348 

1,537,43° 

43,5*8 

10,837 

1888 

1,698,748 

6,237 

889,073 

14,359 

1,107 

are  not  insignificant  advantages,  although  we  may  think  they 
cost  too  dear  and  may  be  better  gained  in  other  ways. 

Pauper  burials,  although  not  an  accurate  measure  of  the  distress 
of  the  period,  reached  an  average  rate  of  20  per  10,000  of  population. 
During  1881  to  1885  the  rate  for  18  cities  was  18.5  against  an  average 
of  12.9  during  the  five  years  1897  to  ipoi.8 


3J.    F.    Dryden,   A    Quarter   Century    of   Industrial   Insurance   in    the 
United  States,  p.  8. 


158 


INDUSTRIAL  INSURANCE 


GENERAL  SUMMARY 


J« 

POLICIES  IN  FORCE 

YEAR 

0* 

NEW  POLICIES 
IN  THIS  YEAR 

PREMIUMS 
RECEIVED 

PAYMENTS 

d  * 
£ 

Number 

Amount 

1904 

14 

$624,422,316 

I5,637,692 

$2,132,300,723 

$110,006,643 

$31,302,626 

1903 

15 

596,510,565 

14,600,502 

,977,!85,534 

98,063,490 

27,408,191 

1902 

1C 

610,968,819 

13,444,753 

,806,454,742 

85,146,410 

23,243,657 

1901 

15 

598,593,825 

12,333,459 

,640,398,546 

74,660,060 

22,003,402 

1900 

18 

566,037,936 

11,215,53! 

,468,474,534 

65,962,426 

19,607,808 

1899 

17 

519,796,085 

10,048,808 

,292,812,402 

56,159,889 

17,023,485 

1898 

14 

422,164,810 

8,794,178 

,109,526,870 

48,776,246 

14,971,238 

1897 

12 

4~i5,338,6i4 

8,000,636 

995,545,736 

43,619,310 

13,526,315 

1896 

II 

360,852,458 

7,375,688 

886,484,869 

40,058,701 

13,420,336 

1895 

II 

380,832,362 

6,943,769 

819,521,573 

37,008,536 

12,398,782 

1894 

12 

573,279,943 

6,847,892 

802,016,133 

32,253,881 

10,635,602 

1893 

II 

344,361,223 

5,748,195 

661,568,502 

28,311,386 

9,955,865 

1892 

IO 

276,893,923 

5,118,897 

582,710,309 

24,352,900 

8,841,322 

1891 

9 

218,138,800 

4,302,427 

481,060,716 

20,654,980 

7,725,328 

1890 

9 

242,250,959 

3,875,102 

428,037,245 

17,647,036 

6,423,341 

1889 

8 

201,787,017 

3,352,708 

364,483,382 

14,760,691 

5,086,233 

1888 

7 

161,260,335 

2,788,000 

302,033,066 

11,939,540 

4,162,745 

1887 

4 

158,845,704 

2,296,001 

254,104,877 

9,692,425 

3,370,346 

1886 

3 

132,674,189 

1,764,158 

196,694,876 

7,368,142 

2,466,725 

1885 

3 

93,736,727 

1,360,376 

144,101,632 

5,530,622 

1884 

3 

89,150,302 

1,076,422 

108,451,099 

4,486,612 

i^499'432 

1883 

3 

77,017,326 

863,584 

86,321,162 

3,276,856 

1,029,160 

1882 

3 

52,082,281 

580,364 

55,514,768 

2,233,647 

721,072 

1881 

3 

37,089,522 

359,942 

32,641,798 

1,608,891 

541,925 

1880 

3 

34,768,035 

228,357 

19,590,780 

1,155,360 

430,631 

1879 

3 

4,956,809 

58,185 

5,334,531 

548,163 

329,575 

1878 

i 

1,785,696 

22,808 

2,027,888 

59,817 

1877 

i 

967,932 

11,226 

1,030,655 

28,517 

5,296 

1876 

i 

727,168 

4,816 

443,072 

14,495 

J,958 

Total 

$7,797,291,727 

$845,385,672 

$260,069,267 

Hoffman4  presents  a  study  of  pauper  burials  in  ten  cities 
(New  York,  Boston,  Newark,  Cincinnati,  Baltimore,  Indian- 
apolis, Minneapolis,  Cambridge,  Worcester,  and  Charlotte), 
and  finds  that  the  rate  of  pauper  burials  in  100,000  popula- 
tion was,  in  1880  to  1884,  210,  and  fell  in  1895  to  ^99  to 
156,  after  the  industrial  companies  had  had  time  to  estab- 
lish the  custom  of  burial  insurance  on  a  general  scale. 
It  is  impossible  to  discover  all  the  causes  of  this  decrease, 


History  of  the  Prudential  Insurance  Co.,  p.  308. 


PRIVATE  INSURANCE  COMPANIES 


but  we  may  admit  a  large  influence  from  burial  insurance. 
They  have  unintentionally  rendered  another  service  to  the 
cause  of  a  rational  system  of  insurance  which  the  future 
will  develop;  they  have  shown  that  voluntary  systems  are 

TABLE  III 

FOR  A  PAYMENT  OF  5  CENTS  PER  WEEK  THE  BURIAL  BENEFIT  PROMISED  Is: 


S'S 

e 

*o 

e 

^ 

e 

** 

e 

1  Age  at  Beginni 
of  Payment 
Premiums 

Prudential  Co. 

Western  and 
Southe 

Age  at  Beginni 
of  Payment 
Premiums 

Prudential  Co. 

Western  and 
Southe 

Age  at  Beginni 
of  Payment 
Premiums 

Prudential  Co. 

Western  and 
Southe 

Age  at  Beginni 
of  Payment 
Premiums 

Prudential  Co. 

Western  and 
Southe 

10  

$120 

$120 

26  

$74 

$75 

41  ..  . 

$49 

$48 

56  

$27 

$26 

ii  

118 

27.  .  . 

72 

72 

42.  .  . 

47 

46 

57---- 

26 

25 

12.  . 

116 

no 

28.  .. 

43--- 

45 

44 

58.... 

25 

24 

13- 

112 

106 

29. 

69 

69 

44-   • 

44 

42 

59-  •  • 

23 

22 

14- 
15. 

108 

103 

103 

IOO 

3°- 

67 
66 

6? 
65 

2:  : 

42 

41 
40 

60..  . 
61..  • 

22 
21 

21 
20 

16. 

IOO 

98 

32. 

64 

63 

47.  . 

39 

39 

62..  . 

20 

19 

17. 

94 

95 

33- 

62 

61 

48.  . 

38 

37 

63.-  • 

19 

18 

18. 

92 

92 

34- 

60 

59 

49.  . 

37 

35 

64.-  - 

18 

17 

19. 

20. 

89 
87 

35-   • 
36.   - 

59 

57 

1 

50.  . 
51-  • 

35 
34 

34 
33 

65.-  - 
66..  . 

17 
16 

16 
15 

21. 

84 

85 

37-   • 

55 

54 

52-  • 

32 

32 

67.-  • 

16 

14 

22..   .. 

82 

83 

38.   - 

54 

53 

53-   • 

31 

31 

68..  . 

15 

13 

23..   .. 

80 

81 

39-  •  • 

52 

51 

54.   • 

30 

30 

69.-  • 

14 

12 

24.  .   .  . 

78 

79 

40..  . 

So 

49 

55--- 

28 

28 

70..  . 

13 

II 

25..   .. 

76 

77 

TABLE  IV 

BURIAL  MONEY  AT  DEATH  OF  CHILD,  PAYABLE  IF  POLICY  HAS  BEEN  IN  FORCE 
THE  TIME  STATED* 


Age 

Under 
3  Mos. 

Under 
6  Mos. 

Under 
9  Mos. 

Under 
lYear 

i 
Year 

Years 

Years 

Years 

Ylars 

6 
Years 

Y^ars 

8 
Years 

2.     .. 

3-     • 
4.     . 
5-     • 
6.     . 

I'     ' 

$  8 
9 
10 
ii 

12 

14 

16 

$10 

ii 
13 
14 
16 
19 

$12 

14 
16 
18 

22 
26 

$15 
17 

20 
24 
29 

35 

$17 

20 
24 
29 

39 
g 

$20 
24 
29 

& 

8s 

$24 

29 

47 
65 
90 

120 

$29 
Si 
70 
95 
1  20 

$55 
75 

IOO 

I2O 

$80 

IOO 
120 

$100 

120 

$120 

9.     . 

20 

28 

50 

75 

120 

*  John  Hancock  Life  Insurance  Co.  of  Virginia,  and  the  Prudential. 

costly  and  inadequate  and  that  in  all  probability  obligatory 
measures  alone  will  bring  such  benefits  within  the  power  of 
low-paid  workmen.  But  while  we  may  try  to  be  just  to  the 
companies,  and  may  admit  that  they  have  responded  to  a 
universal  demand  of  wage-earners,  we  have  still  to  inquire 


i6o 


INDUSTRIAL  INSURANCE 


TABLE  V 

PREMIUMS  AND  PAYMENTS  OF  THE  "PRUDENTIAL  COMPANY  OF  AMERICA 
POLICY  OF  ADULTS,  ENTAILING  A  WEEKLY  PREMIUM  OF: 


Age 

ci 

$120 

118 
116 

112 

108 

103 

100 

94 
92 
89 
8? 
84 
82 
80 
78 
76 
74 

72 

7i 
69 
67 

66 
64 
62 
60 
59 
57 
55 
54 
52 
50 
49 
47 
45 
44 
42 
4i 
39 
38 
37 
35 
34 
32 
3i 
30 
28 
27 
26 
25 
23 

22 
21 
20 
19 

18 
17 
16 
16 
15 
14 
13 

10 

Cts. 

a 

20 
Cts. 

a. 

30 

Cts. 

£5 

Cts. 

40 

Cts. 

c4?, 

50 
Cts- 

a. 

60 

Cts. 

65 
Cts. 

£ 

$240 
236 
232 
224 
216 
206 
200 
188 
184 
178 
174 
168 
164 
160 
156 
152 
148 
144 
142 
138 
J34 
132 
128 
124 

120 

118 
114 
no 
108 
104 

100 

98 

94 
90 
88 
84 
82 
78 
76 
74 
70 
68 
64 
62 
60 
56 
54 
52 
50 
46 
44 
42 
40 
38 
36 
34 
32 
32 
30 
28 
26 

_•• 

1 

1 

J 

12  

$348 
336 
324 
309 
30° 
282 
276 
267 
261 
252 
246 
240 
234 
228 

222 

216 

213 

207 
201 
I98 
192 

186 
1  80 
177 
171 
165 
162 
156 
150 
147 
141 
135 
132 
126 
123 
117 
114 
in 
105 

102 
96 

93 
90 
84 
81 
78 
75 
69 
66 
63 
60 
57 
54 

8 

48 
45 
42 
39 

$448 
432 
412 
400 
376 
368 
356 
348 
336 
328 
320 
312 
304 
296 
288 
284 
276 
268 
264 
256 
248 
240 
236 
228 

220 

216 

208 
200 

180 

176 

168 
164 
156 
152 
148 
140 
136 
128 
124 

120 
112 
108 
104 
IOO 

92 

88 
84 
80 
76 
72 
68 
64 
64 
60 
56 
52 

$515 
500 
470 
460 

445 
435 
420 
410 
400 
390 
380 
370 
360 
355 
345 
335 
330 
320 
310 
300 
295 
285 
275 
270 
260 
250 
245 
235 
225 
220 

210 
205 
195 
190 
185 
175 
170 

160 
155 
150 
140 
i35 
130 
125 
"5 
no 
105 
100 
95 
90 

u 

80 

75 
70 
65 

•• 

H  

%64 
552 
534 
522 
504 
492 
480 
468 
456 
444 
432 
426 
414 
402 
396 
384 
372 
360 
354 
342 
330 
324 
3" 
300 
294 
282 
270 
264 
252 
246 
234 
228 

222 
210 
204 
192 

1  86 
1  80 
168 
162 
156 
150 
138 
132 
126 

120 
114 

108 

102 
96 
96 
90 

84 
78 

$623 
609 
588 
574 
560 
546 
532 
5i8 
504 
497 
483 
469 
462 
448 
434 
420 
413 
399 
385 
378 
364 
35° 
343 
329 
315 
308 
294 
287 
273 
266 
259 
245 
238 
224 
217 

210 
182 

175 
161 

!54 
147 
140 
133 
126 
119 

112 
112 
105 
98 
91 

$672 
656 
640 
624 
608 
592 
576 
568 
552 
536 
528 
512 
496 
480 
472 
456 
440 
432 
416 
400 
392 
376 
360 
352 
336 
328 
312 
304 
296 
280 
272 
256 
248 
240 
224 
216 
208 

200 
l84 
176 

168 
160 
152 
144 

$S88 

574 
546 
532 
5io 
490 

18 

19  

$720 

702 
684 

666 
648 
639 
621 
603 
594 
576 
558 
540 
53i 
513 
495 
486 
468 
450 
441 
423 
405 
396 
378 
369 
35i 
342 
333 
315 
306 
288 
279 
270 
252 
243 
234 
225 
207 
198 
189 
180 
171 
162 

8760 
740 
720 
710 
690 
670 
660 
640 
620 
600 
590 
570 
550 
540 
520 
500 
490 
47o 
450 
440 
420 
410 
390 
380 
370 
350 
340 
320 
310 
300 
280 
270 
260 
250 
230 

220 

$8i4 
792 
78i 
759 
737 
726 
704 
682 
660 
649 
627 
605 
594 
57* 
550 
539 
517 
495 
484 
462 
451 
429 
418 
407 
385 
374 
352 
341 
330 
308 
297 
286 
275 
253 
242 

$852 
828 
804 
792 
768 
744 

720 

708 
684 
660 
648 
624 
600 
588 
564 
540 
528 
504 
492 
468 
456 
444 
420 
408 
384 
372 
360 
336 

$611 
58s 
572 
546 
533 
507 
494 
481 
455 
442 
416 
403 
390 
364 

11  ;;;:; 

11  ;::;: 

33  

8 

11" 

39  

41  

46'" 

48  " 

5i  
52  
S3  

55  
e6    

11'" 

60  

61  
62 

6^ 

64  

65  
66  

a  

See  footnote  (*) 

60 

*  One-fourth  of  the  death  benefit  in  the  first  six  months;   one-half  of  death  benefit  in  the 
second  six  months;  full  benefit  after  one  year  of  insurance. 


PRIVATE  INSURANCE  COMPANIES 


161 


whether  the  good  has  not  been  purchased  at  too  great  a 
price,  and  whether  a  more  economical  system  is  not  possible. 
The  premiums  are  relatively  high  and  the  benefits  extremely 

TABLE  VI 

INFANTILE  TABLE  ENTAILING  A  WEEKLY  PREMIUM  OF  5  CENTS* 


PAYMENTS  AFTER  FOLLOWING 
PERIOD 

AGE  AT  TAKING  OUT  POLICY 

2 

3 

4 

5 

6 

7 

8 

9 

Under  3  Months  

$    8 
10 

12 

15 
J7 
20 
24 
29 

55 
80 

100 

1  20 

$    9 
ii 

14 
17 

20 
24 
29 
51 

75 

100 
120 

$    10 
13 

16 

20 
24 
29 

47 
70 

100 
120 

$    II 
14 

18 
24 
29 
43 
65 
95 
1  20 

$   12 

16 

22 
29 

39 
60 
90 
1  20 

$  14 
19 
26 

35 
55 
85 
1  20 

$  16 

22 

35 

i: 

1  20 

$    2O 
28 
50 

75 

I2O 

3—6  Months  

6-9        "      

Q-I2             "                          

i  Year  

2  Years 



t 

i            

8                                      

*  A  weekly  premium  over  10  cents  is  not  collected. 

TABLE  VII 
PREMIUM  FOR  ADULTS  ON  A  POLICY  CARRYING  A  $500  DEATH  BENEFIT* 


Age 

Weekly 
Premium 

Age 

Weekly 
Premium 

Age 

Weekly 
Premium 

Cents 

Cents 

Cents 

15  Years 

24 

27  Years 

35 

39  Years 

48 

16 

25 

28 

35 

40 

5° 

17 

27 

29 

36 

4i 

51 

18 

27 

3° 

37 

42 

53 

i9 

28 

3i 

38 

43 

56 

20 

29 

32 

39 

44 

57 

21 

3° 

33 

40 

45 

60 

22 

3° 

34 

42 

46 

61 

23 

31 

35 

42 

47 

64 

24 

32 

36 

44 

48 

66 

25 

33 

37 

45 

49 

68 

26 

34 

38 

46 

5° 

71 

*  During  the  first  six  months  $125;    $250  during  the  second  six  months,  and  full  benefit 
($500)  after  one  year  of  insurance. 

low.  The  poorer  wage-earners  must  content  themselves 
with  extremely  small  returns  for  their  enormous  sacrifice. 
Numerous  workers  in  charitable  societies  complain  that  after 


162  INDUSTRIAL  INSURANCE 

the  burial  fees  are  paid  there  is  nothing  left  for  savings ;  that 
while  thrift  may  be  cultivated  in  one  direction  the  benefits 
paid  at  death  in  a  lump  sum  lead  almost  universally  and 
inevitably  to  extravagant  funerals  and  display,  so  that  the 
insurance  company,  their  agents,  and  the  undertakers  profit 
by  the  losses  of  those  who  can  least  afford  such  expenditures. 
President  Hegemann  has  stated  that  in  86  per  cent,  of  cases 
investigated  the  expenses  of  sickness  and  burial  exceeded 
the  benefits  paid,  and  that  the  average  sum  paid  on  infantile 
policies  in  the  year  1897  was  only  $25.83. 

A  very  material  consideration  in  this  connection  is  that 
while  the  burial-benefit  companies  absorb  the  greater  part 
of  the  available  resources  for  insurance  purposes  in  families 
of  small  income,  they  by  no  means  cover  all  the  insurance 
needs  of  such  families  and,  perhaps,  not  the  most  pressing. 
The  attempt  was  made  in  the  earlier  history  of  these  com- 
panies to  provide  sickness  insurance,  but  the  effort  failed 
and  had  to  be  abandoned.  President  Dryden,  in  his  account 
of  this  movement,  says  that  a  company  which  has  its  busi- 
ness scattered  over  a  wide  territory,  and  must  act  through 
salaried  agents,  cannot  undertake  sickness  insurance,  and 
that  this  form  of  insurance  is  possible  only  in  brotherhoods 
or  small  groups  where  the  members  know  each  other  and 
can  detect  and  discipline  malingerers.5  In  the  same  way  it 
can  be  shown  that  this  form  of  organization  cannot  conduct 
accident  insurance,  without  radical  changes  of  method ;  and, 
indeed,  it  would  be  grossly  unjust,  as  we  have  elsewhere 
shown,  to  lay  this  burden  on  the  poorly  paid  employees. 
We  must  conclude,  therefore,  that  these  companies  are 
restricted  to  a  very  limited  field  of  industrial  insurance,  that 
they  render  a  necessary  service  at  enormous  and  burden- 
some cost,  and  that  this  cost  is  so  heavy  as  to  hinder  both 
savings  and  insurance  of  a  desirable  kind. 

6  Inception  and  Early  Problems  of  Industrial  Insurance,  pp.   16,  23. 


PRIVATE  INSURANCE  COMPANIES  163 

A  recent  and  valuable  study  of  the  operation  of  certain 
companies  not  named  has  been  published  in  Bulletin  67  of 
the  Bureau  of  Labor,  November,  1906,  by  Mr.  S.  E.  For- 
man.  In  this  intensive  study  of  a  particular  city  we  see  the 
working  and  effect  of  the  system  at  large,  although  here 
some  of  the  worst  features  appear  in  aggravated  form. 
Washington,  as  the  capital  city,  has  few  manufactures  and 
relatively  a  large  number  of  personal  servants  and  persons 
employed  in  ministering  to  personal  convenience  of  visitors 
and  residents.  The  ratio  of  poorly  paid  negroes  living  on 
fluctuating  income,  with  high  rate  of  sickness  and  mortality, 
is  very  large,  and  their  housing  conditions  are  generally 
bad.  Among  these  the  industrial  insurance  companies  which 
raise  funds  by  levying  assessments  are  popular.  The  assess- 
ment companies  are  not  akin  to  the  fraternal  societies  else- 
where discussed,  but  are  companies  for  profit  of  the 
directors  and  stockholders.  They  are  distinguished  also 
from  the  industrial-insurance  companies  considered  already 
in  the  fact  that  they  carry  on  sickness  and  accident  insurance 
with  burial  benefits  added.  They  are  not  legally  required 
to  carry  a  reserve  fund;  they  collect  the  premiums  by  the 
costly  method  of  weekly  visits,  or  sometimes  by  monthly 
visits ;  and  the  contract  permits  them  to  levy  assessments  to 
meet  deficits,  although  in  fact  competition  with  other  com- 
panies prevents  them  from  exercising  this  right  under 
ordinary  circumstances;  if  the  weekly  premium  is  five  cents 
then  the  yearly  premium  will  be  about  $2.60.  The  policy 
promises  sickness,  accident,  and  death  benefits,  although  the 
forms  of  contracts  are  varied.  Twelve  of  these  companies, 
on  December  31,  1903,  had  in  force  28,921  policies  of  this 
type.  Forman  has  shown  that  those  insured  in  these  com- 
panies must  pay  very  dearly  for  their  insurance — at  least 
75  per  cent,  more  than  those  insured  in  the  regular  com- 
panies, and  also  more  than  those  insured  in  the  ordinary 


164  INDUSTRIAL  INSURANCE 

industrial  insurance  companies  which  offer  accident  and 
sickness  benefits.  If  we  compare  the  insured  in  the  assess- 
ment companies  with  those  insured  in  the  regular  companies 
we  find  the  rate  of  loss  in  excessive  premiums.  We  may  cite 
the  conclusions : 

The  price  of  regular  industrial  insurance  in  all  of  its  forms  has 
been  seen  to  be  very  much  higher  than  that  of  ordinary  insurance. 
An  analysis  of  the  insurance  business  of  the  District  of  Columbia  for 
1903  furnishes  some  measure  of  the  losses  to  the  policy-holders  result- 
ing from  the  purchase  of  life  insurance  on  the  weekly  payment  or 
industrial  plan  when  compared  with  the  cost  of  ordinary  insurance. 
The  rate  of  premiums  charged  differs  according  to  the  form  of  the 
policy,  but  an  examination  of  the  several  tables  which  have  been 
given  would  seem  to  justify  the  statement  that  on  the  average  the 
charge  for  regular  industrial  insurance  is  at  least  75  per  cent,  higher 
than  that  for  ordinary  insurance.  If  the  amounts  collected  for 
premiums  for  the  regular  industrial  policy-holders  ($864,059.61)  could 
have  been  paid  in  annual  payments  and  could  have  purchased  insur- 
ance at  the  rates  charged  by  the  ordinary  companies,  $40,250,227  would 
have  been  secured  by  the  industrial  policy-holders  instead  of  $23,000,- 
130,  the  amount  actually  secured  under  the  industrial  plan.  This 
represents  an  apparent  loss  in  insurance  protection  to  the  industrial 
policy-holders  of  $17,250,000,  or,  if  it  be  measured  in  premium  pay- 
ments, an  apparent  loss  of  over  $370,000  upon  premium  payments  of 
the  year. 

If  now  we  turn  to  the  combination  schemes  offered  by 
the  assessment  companies  we  find  that  similar  policies  of 
ordinary  companies  furnish  300  per  cent,  more  insurance 
for  the  same  money.  Placing  the  ascertained  facts  together 
for  the  poorest  people  of  Washington,  we  may  accept  this 
estimate  of  loss: 

Losses  measured  by  amount  of  insurance  carried — 

a)  Regular  industrial  insurance    $17,250,000 

b)  Assessment  industrial  insurance   3,375,ooo 


Total    $20,625,000 

Or,  if  the  losses  be  measured  in  premium  payments  made  during  the 


PRIVATE  INSURANCE  COMPANIES  165 

year  in  excess  of  what  would  have  been  required  to  purchase  the  same 
amount  of  insurance  if  the  premiums  could  have  been  paid  in  yearly 
payments  in  ordinary  companies,  they  may  be  expressed  as  follows : 

Losses  measured  by  excessive  premiums — 

o)  Regular   industrial    insurance    $370,000 

b)  Assessment  industrial  insurance  120,000 


Total     $490,000 

Of  course  the  facts  set  forth  above  tell  nothing  about  the  reason- 
ableness or  unreasonableness  of  the  cost  of  either  ordinary  insurance 
or  of  industrial  insurance.  They  simply  show  what  the  cost  of  indus- 
trial insurance  is  and  how  much  greater  that  cost  is  than  the  cost 
of  ordinary  insurance,  and  illustrate,  as  did  the  study  of  conditions  of 
living  among  the  poor,  that  the  smaller  the  earning  power  of  a  wage- 
earner,  the  smaller  also  is  the  purchasing  power  of  each  of  his  dollars. 

The  facts  already  recited  have  long  been  familiar  to 
students  and  to  visitors  among  the  poor  of  our  cities,  and 
many  schemes  for  mitigating  the  evils  have  been  debated, 
thus  far  without  result.  The  older  counsel  was  to  encourage 
saving  deposits  and  to  assist  the  people  to  utilize  very  small 
savings  for  this  end.  But  to  this  plan  there  are  very  grave 
objections,  since  it  is  an  attempt  to  lay  the  burden  of  indus- 
trial risk  altogether  on  the  poor  and  compel  them  to  carry 
the  accident  insurance  burden  which  all  admit  should  be 
borne  by  the  business  which  causes  the  risk.  Furthermore 
the  sum  which  can  by  any  possibility  be  saved  by  unskilled 
workpeople  is  utterly  inadequate  at  any  time  and  especially 
during  the  first  years  of  married  life  when  the  expense  of 
rearing  children  increases  and  consumes  all  earnings. 

The  chief  causes  of  the  extravagant  insurance  premiums 
to  the  poor  are:  (a)  the  unfair  part  of  the  receipts  from 
premiums  and  interest  which  is  kept  by  the  chief  officers 
of  the  companies  from  the  dividends  of  the  insured;  (b) 
the  excessively  high  salaries  of  the  officers  of  administra- 
tion; (c)  above  all  the  fees  to  agents  for  soliciting  insur- 


i66  INDUSTRIAL  INSURANCE 

ance  under  the  weekly  collection  plan.  The  first  and  second 
causes  of  waste  may  be  to  some  extent  reduced  by  the  legis- 
lative and  administrative  action  of  the  states,  by  publicity 
of  accounts,  and  by  inspections  and  rules  of  management. 
But  not  in  any  such  direct  way  can  political  means  reduce 
the  third  and  most  important  cause  of  waste  of  the  contri- 
butions of  low-paid  workingmen.  If  we  are  ever  to  place 
the  business  of  industrial  insurance  on  a  fair  and  economic 
basis  the  agent  must  be  dismissed ;  all  other  means  of  relief 
are  relatively  insignificant.  Assuming  that  every  director 
is  honorable,  that  expenses  of  administration  are  reduced  to 
a  minimum,  that  the  agents  themselves  are  paid  a  mere 
pittance,  yet  the  system  itself  must  necessarily  absorb  a  very 
great  sum  from  the  hard-won  earnings  of  the  working- 
people.  This  argument  has  been  urged  by  the  advocates  of 
the  savings-bank  method  of  industrial  insurance  in  Massa- 
chusetts. A  society6  has  been  formed  in  Boston  for  the 
purpose  of  securing  legislation  permitting  the  savings  banks 
to  go  into  the  life-insurance  business;  and  the  necessary 
law  has  been  passed.  Among  the  founders  of  this  associa- 
tion are  numbered  men  of  education,  philanthropy,  and  busi- 
ness standing;  some  of  them  would  be  glad  to  help  intro- 
duce compulsory  insurance  in  some  form,  but  are  dis- 
couraged from  making  efforts  in  that  direction  by  the  apathy 
of  the  public,  the  failure  of  the  bill  offered  in  1904,  and  by 
the  constitutional  and  economic  obstacles  which  confront 
all  such  attempts  in  this  country.  Some  of  the  savings 
banks  have  declared  their  readiness,  in  case  they  are  em- 
powered by  law,  to  try  the  proposed  experiment.  Under 
the  plan  proposed  there  would  be  no  expense  of  solicitation 
by  agents:  the  commodity  would  be  offered,  and  then  the 
banks  would  depend  on  the  education  of  the  people  to  induce 
them  to  take  advantage  of  the  opportunity  of  insuring  them- 

6  The   Savings  Bank  Insurance  League. 


PRIVATE  INSURANCE  COMPANIES  167 

selves  at  bare  cost.  It  is  argued  by  the  friends  of  this 
movement  that  the  savings  banks  not  only  in  Massachusetts 
but  elsewhere  have  won  the  confidence  of  the  country  by 
their  honest  and  careful  management  of  the  deposits,  and 
in  some  instances  the  administrators,  with  the  exception  of 
a  few  salaried  officers,  perform  their  duties  without  charge 
and  for  the  public  good.  Thus  the  savings  banks,  especially 
in  Massachusetts,  seem  to  be  the  most  promising  agencies 
for  cheap  insurance. 

On  the  other  hand  the  representatives  and  managers  of 
the  regular,  orthodox  life-insurance  companies  think  they 
have  discovered  the  Achilles-heel  of  this  scheme.  They 
assert  that  comparatively  few  persons,  least  of  all  the  very 
poor  who  most  need  relief,  can  be  induced  to  apply  volun- 
tarily for  insurance  without  the  persistent  labor  of  agents. 
The  employment  and  payment  of  agents  is  a  necessary  and 
legitimate  expense,  since  without  it  working-people  must 
go  without  the  needed  benefits.  It  is  asserted  by  these  advo- 
cates of  present  methods  that  the  founders  of  the  new 
association,  however  estimable  and  amiable,  must  lack 
knowledge  of  the  business  and  the  history  of  life  insurance, 
that  they  are  mere  theorists  and  impractical.  In  support  of 
this  contention  they  cite  the  experience  of  the  British  com- 
panies who  have  tried  a-  similar  scheme,  the  old  Equitable, 
the  London  Life,  and  the  Metropolitan  of  London.  Still 
more  striking  is  the  example  of  the  industrial  insurance 
societies  whose  purpose  is  to  guarantee  burial  money  for 
working-people.  The  British  Post-office  Department  has 
offered  small  policies  for  forty  years  at  low  cost.  These 
policies  are  written  at  local  post-offices  and  the  premiums 
may  be  paid  in  weekly  instalments.  At  the  end  of  the  year 
1904,  after  forty  years'  trial,  the  government  insurance 
office  had  in  force  only  12,875  policies  of  this  kind;  while 
the  Pearl  Life  Assurance  Co.  of  London,  which  began 


l68  INDUSTRIAL  INSURANCE 

operations  only  a  year  earlier  than  the  post-office,  had  in 
force  2,320,463  policies,  and  the  Refuge  Assurance  Co.  of 
the  same  age  as  the  Pearl,  had  2,628,650  industrial  policies 
in  force.  The  Prudential  Assurance  Co.  of  London,  only  a 
little  older  than  the  post-office  department  of  insurance,  had 
in  force  at  the  end  of  the  year  1904  between  fifteen  and 
sixteen  million  policies.  During  the  year  1904  the  post- 
office,  with  its  23,068  branch  offices  wrote  only  517  new 
policies.  The  Prudential  of  London  in  the  same  year 
wrote  71,700  industrial  policies.  The  conclusion  of  these 
experts  and  representatives  of  the  insurance  companies 
therefore  virtually  is  that  there  is  no  relief  for  the  working- 
people;  the  only  outlook  is  that  they  must  continue  to  bear 
this  heavy  burden. 

Of  course  the  philanthropists  of  Massachusetts  may  be 
able  to  set  in  motion  educational  agencies  to  reverse  this 
condition  and  win  customers  to  their  savings-bank  insurance 
companies.  Already  the  powerful  associated  charities  are 
considering  methods  of  co-operation  with  the  insurance 
associations;  and  with  their  fine  organization  of  friendly 
visitors  they  might  accomplish  much;  how  much,  only  trial 
can  reveal.  But  in  any  case  these  associations  must  still 
leave  the  great  problems  of  accident  and  sickness  insurance 
at  one  side;  they  cannot  solve  these  problems,  for  only 
compulsory  insurance  can  ever,  at  one  stroke,  make  insur- 
ance even  general. 

A  recent  authoritative  statement  regarding  the  Massa- 
chusetts old-age  annuities,  has  been  made  by  Louis  D. 
Brandeis  :7 

The  American  Federation  of  Labor  has  always  striven  to  make 
the  American  wage-earner  independent.  With  this  end  in  view  its 
members  strongly  urged  upon  the  Massachusetts  legislature  last  year 
the  passage  of  the  savings-bank  insurance  and  annuity  bill  already 

7  American  Federationist,  Aug.,  1908,  p.  595. 


PRIVATE  INSURANCE  COMPANIES  169 

discussed  in  the  American  Federationist.  That  act  has  now  been  put 
into  operation.  The  Whitman  Savings  Bank  opened  its  annuity  and 
insurance  department  June  18,  1908.  The  People's  Savings  Bank  of 
Brockton,  of  which  ex-Governor  Douglas  is  president,  will  soon  fol- 
low and  a  wide  extension  of  the  movement  is  expected. 

The  movement  rests  upon  this  economic  truth  long  ignored,  but 
now  gaining  general  recognition:  Wages  to  be  "living  wages"  must 
enable  the  workingman  to  make  adequate  provision  for  the  future. 
Wages  are  not  "living  wages"  if  they  provide  merely  a  sum  sufficient 
to  pay  for  adequate  food,  shelter,  clothing,  education,  and  recreation. 
They  must  leave  a  surplus  which,  if  properly  used,  will  provide  for 
the  contingencies  of  the  future — for  superannuation  or  premature 
death  as  well  as  against  accident,  sickness,  or  unemployment.  The 
"cost  of  living"  includes  the  daily  pro  rata  of  such  sum  as  is  neces- 
sary to  make  this  provision  for  the  future.  Its  cost  is  a  fixed  charge 
upon  the  workingman's  living.  If  he  does  not  pay  it  by  setting  apart 
every  week  or  month  a  proper  contribution  from  current  wages  he  or 
those  dependent  upon  him  must  eventually  become  a  burden  upon 
family  or  friends  or  the  community. 

The  recognition  of  this  economic  truth  is  leading  to  a  demand  in 
nearly  every  industrial  country  for  some  old-age  provision  for  wage- 
earners.  Germany  adopted  a  quarter  of  a  century  ago  a  compulsory 
system  of  old-age  insurance,  the  burden  to  be  divided  between 
employer,  employee,  and  the  state.  England  having  meanwhile  ignored 
this  economic  truth  is  being  driven  now  to  an  old-age  pension  resting 
upon  general  taxation — a  modified  form  of  pauper  relief.  Massa- 
chusetts aims  to  pursue  a  policy  more  in  harmony  with  her  traditions 
and  American  institutions.  She  seeks  to  secure  for  her  wage-earners 
voluntary,  not  compulsory,  old-age  insurance,  to  make  her  superannu- 
ated workingmen  independent  instead  of  dependent,  to  relieve  instead 
of  further  burdening  general  taxation. 

Massachusetts  is  undertaking  to  make  saving  popular  by  insuring 
to  the  saver  everything  his  money  can  earn.  Under  her  new  system 
the  terrible  waste  of  insurance  solicitors'  and  collectors'  fees,  of  high 
salaries,  and  of  exorbitant  dividends  to  stockholders,  which  charac- 
terize the  industrial  insurance  companies,  will  be  avoided.  Annuities 
and  life  insurance  will  be  furnished  to  the  wage-earners  at  the  lowest 
possible  cost.  The  only  dividends  will  be  those  paid  to  the  policy 
holders,  who  will  get  their  equitable  share  of  all  the  profits  of  the 
business. 


170  INDUSTRIAL  INSURANCE 

The  Massachusetts  state  actuary  in  a  pamphlet  entitled  "Who  Will 
Pay  Your  Wages  When  You  Are  Old  and  Gray?"  shows  clearly  how 
the  savings  banks  will  supply  this  great  need  of  the  wage-earner. 
Extracts  follow: 

"THREE  THINGS  NECESSARY 

"There  are  three  things  that  every  man  should  do: 

"First,  Save  enough  money  to  take  care  of  himself  in  his  old  age. 

"Second,  Save  enough  money  to  take  care  of  his  family  in  case 
he  dies. 

"Third,  Save  enough  money  to  take  care  of  himself  and  family 
in  case  he  or  one  of  the  family  is  sick. 

"By  means  of  the  savings  banks  you  have  been  able  to  save  money 
for  object  No.  3,  but  what  about  the  other  two? 

"There  is  only  one  way  by  which  you  can  do  both  of  those  things 
at  one  and  the  same  time.  That  is  by  buying  an  insurance  and 
annuity  policy,  and  the  only  place  for  wage-earners  to  get  such  a 
policy  is  in  one  of  the  savings  banks  of  Massachusetts." 

The  insurance  and  annuity  policy  is  then  explained  thus : 

"This  policy  provides  that  you  deposit  with  the  bank  a  small 
premium  each  month  until  your  sixty-fifth  birthday. 

"The  bank,  after  you  attain  the  age  of  sixty-five  years,  will  pay 
you  a  certain  sum  of  money  every  year  during  your  life,  or  in  case 
of  our  death  prior  to  that  time,  a  certain  sum  of  money  will  be  paid 
to  your  family  at  your  death. 

"For  example :  Suppose  you  are  twenty-one  years  old  on  your 
next  birthday.  You  deposit  with  the  bank  $1.13  every  month  until 
your  sixty-fifth  birthday. 

"The  bank,  on  your  attaining  the  age  of  sixty-five  years,  will  pay 
you  $100  every  year  during  your  life,  or,  in  case  of  your  death  before 
that  time,  the  bank  will  pay  $500  to  your  family  at  your  death. 

"Furthermore,  your  policy  will  receive  its  share  of  the  profits 
earned  by  the  insurance  department  of  the  bank. 

"Here  is  a  policy  just  suited  to  your  needs.  It  will  help  to  take 
care  of  you  after  your  working  days  are  done  as  no  other  means  can. 

"Regularly  once  a  year,  after  you  are  sixty-five  years  of  age,  the 
bank  will  deposit  one  hundred  dollars  to  your  account  in  the  savings 
department  where  it  will  earn  interest,  and  from  which  you  can  draw 
each  week  enough  money  to  pay  for  your  needs. 


PRIVATE  INSURANCE  COMPANIES  171 

"Besides  doing  all  that,  it  protects  your  family  in  case  of  your 
death  until  you  are  sixty-five  years  of  age,  when  the  annuity  begins. 

"A  young  man  can  buy  this  policy  for  less  money  than  he  can  buy 
a  life  policy  in  an  insurance  company  that  employs  house-to-house 
collectors. 

"Suppose  you  are  twenty-five  years  old  and  pay  to  the  savings  bank 
$1.30  each  month  and  your  neighbor  who  is  the  same  age  pays  $1.35 
each  month  to  the  insurance  company. 

"When  you  reach  the  age  of  sixty-five,  you  will  have  no  more 
deposits  to  make.  Instead  of  making  deposits  you  will  begin  to 
receive  an  annuity  of  $100. 

"While  you  are  enjoying  the  fruits  of  your  saving,  your  neighbor 
will  still  be  paying  $1.35  every  month  to  the  insurance  company  and 
he  will  have  to  continue  paying  this  amount  until  he  is  seventy-five 
years  old. 

"Which  would  you  rather  be,  your  neighbor  or  yourself? 

"If  he  takes  out  a  policy  at  eighteen,  paying  $i  premium  a  month, 
he  will  get,  in  case  of  death  before  sixty-five,  at  least  $496.  If  he  lives 
longer  he  will  get  $99  a  year,  beginning  at  age  sixty-five  and  con- 
tinuing until  he  dies.  He  may  get  considerably  more;  for  he  gets 
besides  the  fixed  amount  of  insurance  his  share  of  the  profits." 

While  the  Massachusetts  insurance  and  annuity  act  prohibits  the 
savings  banks  from  employing  solicitors  and  collectors,  it  provides  in 
the  completest  manner  for  the  establishment  of  agencies  through 
which  annuities  and  insurance  may  be  secured  and  premiums  and 
benefits  be  paid.  It  is  proposed  that  the  opportunities  for  saving 
money  should  be  made,  if  possible,  as  numerous  and  as  convenient 
as  the  opportunities  for  spending  it.  Not  only  may  each  savings  bank 
become  an  agent  for  others,  but  agencies  may  be  established  in  facto- 
ries or  stores  and  by  other  organizations. 

Widespread  education  as  to  the  advantages  of  the  system  are, 
of  course,  essential  to  its  success.  But  in  this  necessary  work  of  edu- 
cation long  strides  have  already  been  taken.  The  enlightening  cam- 
paign which  preceded  the  passage  of  the  act  resulted  in  a  wide  dis- 
cussion of  the  subject  in  every  part  of  the  state.  Nearly  300  labor 
unions  joined  in  the  effort  to  secure  the  requisite  legislation. 

The  presidents  of  the  state  branch  of  the  American  Federation  of 
Labor,  of  the  Boston  Central  Union,  and  the  International  Tex- 
tile Workers'  Union — thus  representing  Massachusetts'  leading  indus- 
tries— were  among  its  most  enthusiastic  supporters.  The  movement  is 


172  INDUSTRIAL  INSURANCE 

thus  assured  of  a  broad  sympathy  from  the  wage-earners.  It  has 
secured  the  same  cordial  support  from  employers,  from  social  workers, 
and  other  public  spirited  citizens. 

The  efficient  administration  of  the  new  law  is  assured.  It  is  under 
the  general  supervision  of  the  trustees  of  the  general  insurance 
commissioner;  and  the  savings  insurance  and  annuity  banks  are  under 
the  general  supervision  of  the  trustees  of  the  general  insurance 
guaranty  fund.  The  members  of  this  board  are  appointed  by  the 
governor  from  among  the  trustees  of  the  savings  banks.  They  are 
men  of  influence  and  ability  and  are  filled  with  zeal  for  this  impor- 
tant work. 

Another  Massachusetts  scheme  seems  to  deserve  notice 
in  this  connection,  although  the  corporation  has  not  yet 
begun  active  operations.  The  statement  is  furnished  by  the 
actuary,  Mr.  M.  C.  Bradley,  and  the  names  of  the  incor- 
porators  are  representative  of  New  England  intelligence, 
integrity,  and  philanthropy. 

STATEMENT  OF  THE  ORGANIZATION  AND  PLANS  OF 
THE  MUTUAL  DIRECT  LIFE  INSURANCE  SOCIETY  OF 
BOSTON 

The  Mutual  Direct  Life  Assurance  Society  of  Boston  was  incor- 
porated by  special  act  of  the  Massachusetts  legislature  (chap.  368, 
1907;  chap.  88,  1908).  The  principal  provisions  of  the  charter  are: 
that  the  society  shall  have  a  paid-up  capital  of  $200,000,  and  a  paid-in 
surplus  of  $100,000,  all  of  which,  until  retired,  shall  be  entitled  to 
cumulative  dividends  from  earned  surplus  at  a  rate  not  to  exceed  5 
per  cent,  per  annum;  that  the  capital  and  surplus  shall  be  retired, 
making  the  society  purely  mutual,  as  soon  as  it  can  be,  and  still  leave 
a  surplus  of  $100,000;  that  the  society  shall  not  employ  any  person 
to  solicit  business  or  to  make  house-to-house  collections  of  premiums; 
that  it  may  appoint  correspondents,  establish  offices,  and  adopt  means 
for  the  receipt  of  applications  for  assurance  and  for  the  deposit  of 
premiums  and  annuity  payments;  and  that,  except  as  provided  in  the 
act  of  incorporation,  the  society  shall  be  amenable  to  all  the  assurance 
laws  of  Massachusetts. 

Renewal  premiums  may  be  deposited  with  the  correspondent  who 
is  most  convenient,  or  may  be  sent  by  mail  to  the  society  direct.  So 


PRIVATE  INSURANCE  COMPANIES  173 

that  not  more  than  one  visit  need  be  made  to  the  office  of  a  corre- 
spondent. Indeed,  those  who  wish  may  conduct  by  mail  all  the 
negotiations  except,  in  the  case  of  life  assurance,  the  medical  exami- 
nation. 

As  the  growth  of  the  society  warrants,  branch  offices  will  be  main- 
tained in  the  different  states,  in  charge  of  salaried  managers  who  will 
instruct  the  correspondents,  explain  the  plans  of  the  society  to  social 
and  labor  organizations,  and  to  the  employers  of  labor. 

In  the  Mutual  Direct  the  chief  officers  will  receive  at  most  only 
nominal  salaries.  So  that  the  society  can  safely  reduce  the  premiums 
for  life  assurance  at  least  10  per  cent,  on  the  average,  grant  surren- 
der values  from  the  first  year,  and  still  return  to  policy-holders 
dividends,  so  called,  as  large  as,  or  larger  than  those  being  paid  by 
the  best  managed  agency  companies. 

With  the  patronage  of  those  who  carry  policies  in  amounts  from 
$1,000  up  to  really  large  sums,  the  society  will  merit  the  favorable  con- 
sideration of  the  officers  of  wage-workers'  societies  and  trade-unions, 
and  of  employers  of  labor.  They  will  appreciate  the  stamp  of  approval 
that  thai  patronage  represents.  They  can,  with  propriety,  and  will, 
it  is  believed,  be  inclined  to  secure  proportionate  benefits  from  the 
society  for  their  members,  or  for  their  employees. 

To  these  will  be  especially  attractive  the  society's  plans  for  annui- 
ties. It  is  proposed  to  issue,  besides  the  usual  immediate  and  deferred 
annuities,  a  contract  for  an  annuity  becoming  due  nominally  at  age  70, 
but  which  may  be  entered  upon  at  any  earlier  age,  whenever  the 
annuitant  elects,  the  amount  being  equitably  reduced.  The  contract 
will  provide  that  payments,  within  certain  limits,  may  be  made  at  any 
time,  the  total  annuity  at  age  70  (or  at  the  earlier  ages)  being  corre- 
spondingly increased  by  each  such  payment.  Tables  printed  in  the 
contract  will  show  what  annuity  at  age  70  can  be  purchased  by  the 
deposit  of  any  specified  amount  at  any  specified  age;  and  in  what  pro- 
portion the  annuity  will  be  reduced  by  being  entered  upon  at  any  age 
earlier  than  70. 

The  organization  can  be  used  by  employers  in  any  state 
for  the  purpose  of  providing  pensions  for  employees.  Each 
year's  revenues  are  charged  only  with  the  amount  that  year's 
business  warrants.  The  pension  of  the  employee  is  certain 
and  of  a  definite  amount,  not  contingent  on  the  future 
policy  of  his  employer  or  upon  the  future  prosperity  of  the 


174  INDUSTRIAL  INSURANCE 

business ;  and  the  employee  is  not  bound  by  financial  interest 
to  any  particular  employer.  The  plans  and  rates  are  not 
ready  for  publication  at  the  time  of  writing. 

II.    CASUALTY    INSURANCE    COMPANIES 

In  the  absence  of  social  organization  by  the  states,  certain 
accident  insurance  companies  have  entered  into  competition 
with  trade  unions  and  mutual  benefit  societies  to  furnish  the 
desired  accident  and  sickness  insurance  for  wage-earners. 
We  have  not  yet  at  hand  satisfactory  statistics  of  the  opera- 
tions of  these  companies,  and  we  are  told  by  some  of  them 
that  they  dare  not  let  rival  companies  even  see  their  reports 
on  account  of  the  exigencies  of  competition.  The  reports 
which  have  been  published  do  not  always  distinguish  the 
economic  classes  of  their  clients,  and  so  do  riot  inform  us 
what  number  of  wage-earners  are  included.  Skilled  artisans 
and  well-paid  mechanics  may  be  able  to  pay  for  a  fair 
amount  of  accident  and  sickness  insurance,  but  the  rates  are 
prohibitive  for  those  on  bare  living-wages,  and  these  are  in 
the  great  majority.  Even  when  insurance  is  taken  there  is 
common  and  growing  complaint  that  the  contracts  are 
narrow  and  narrowly  interpreted  in  settlements.  Thus  it 
is  claimed  that  many  diseases  are  included  which  rarely 
occur  and  many  omitted  which  are  very  common;  so  that 
in  reality  more  is  promised  than  is  paid.  It  is  asserted  that 
there  are  so  many  technical  clauses  modifying  the  agree- 
ments that  no  man  can  know  in  advance  what  his  claim 
actually  is.  But  the  need  of  insurance  is  so  widely  and 
keenly  felt,  and  the  misery  of  being  without  protection  is 
so  intolerable,  that  the  business  of  these  companies  is  grow- 
ing and  is  already  considerable.  Not  seldom  the  employers 
are  disposed  to  assist  the  introduction  of  this  form  of  insur- 
ance in  their  establishments,  since  they  know  its  value  to  the 
men  and  realize  that  men  who  are  insured  are  somewhat 


PRIVATE  INSURANCE  COMPANIES  175 

less  inclined  to  sue  for  damages  in  case  of  injury  if  they  have 
some  benefits  coming  in  during  disability.  The  companies 
began  with  accident  insurance,  but  the  demand  for  sickness 
insurance  led  some  companies  to  offer  this  and  competition 
is  driving  other  companies  to  follow  their  example. 

The  workmen's  collective  policy. — The  essential  feature 
of  this  plan  is  to  include  all  the  employees  of  a  firm  or  cor- 
poration in  a  single  contract  which  insures  them  against  loss 
by  reason  of  accident  or  accident  and  sickness.  The  em- 
ployer pays  a  premium  which  is  based  on  the  number  of 
employees,  the  hazard  of  the  occupation,  and  the  amount  of 
wages.  The  insurance  company  agrees  to  pay  indemnities 
according  to  a  graduated  scale.  Then  the  employer  makes 
a  contract  with  his  employees  according  to  which  he  is 
authorized  by  them  to  retain  a  weekly  sum  from  their  wages 
to  reimburse  him  for  payment  of  premiums.  Rarely,  the 
employer  pays  a  part  or  even  all  the  premiums  himself 
without  taking  anything  from  wages.  The  premium  ad- 
vanced is  based  provisionally  on  the  estimated  number  of 
workmen  and  the -amount  of  wages  for  the  coming  year; 
if  at  the  end  of  the  year  it  appears  that  the  force  has  been 
increased  a  supplementary  sum  must  be  paid  the  company 
insuring;  and  if  the  pay-roll  shows  that  the  premium  ad- 
vanced was  too  large  the  insuring  company  returns  the 
excess.  The  employer  acts  as  trustee  of  the  men  and  is 
paid  for  his  trouble  usually  5  per  cent,  for  cost  of  collecting 
premiums.  If,  as  sometimes  happens,  the  employer  insures 
himself  against  damage  suits,  another  5  per  cent,  is  deducted 
from  the  premium.  Both  forms  of  insurance  may  be  cov- 
ered in  one  policy.  This  form  has  suggested  some  of  the 
features  of  the  bill  proposed  by  the  Illinois  Industrial  Insur- 
ance Commission. 

A  few  examples  are  given  of  various  forms  of  insurance 


1 76  INDUSTRIAL  INSURANCE 

of  large  numbers  of  employees.  The  General  Accident  In- 
surance Company  of  Philadelphia  deposits  $100,000  with 
the  Pennsylvania  Insurance  Department  to  give  a  guarantee 
of  all  contracts.  In  its  industrial  department  it  writes 
policies  for  workingmen's  indemnity,  which  it  describes  as 
a  collective  policy  issued  to  the  employer  as  trustee  for  his 
employees,  furnishing  health  and  accident  insurance  for 
monthly  premiums,  paying  monthly  benefits  to  employees 
for  loss  of  time  caused  by  accident,  not  to  exceed  fifty- two 
consecutive  weeks,  no  matter  when  or  how  the  accident 
happens,  whether  in  factory,  going  to  or  from  work,  or  on 
recreation.  Substantial  benefit  is  paid  if  the  insured  is 
killed  by  accident,  or  for  the  loss  of  one  or  more  limbs  or 
eyes.  Sick  benefits  are  paid  for  every  disease  to  which  flesh 
is  heir,  while  the  insured  is  confined  to  the  house,  after  the 
policy  has  been  in  force  thirty  days  for  a  limit  of  six 
months,  with  the  exception  of  rheumatism,  paralysis,  tuber- 
culosis, Bright's  disease,  for  which  full  indemnity  is  paid 
for  a  limit  of  two  months  in  any  one  year.  In  addition,  full 
medical  or  surgical  attention  is  given,  whether  disabled  or 
not.  Inducements  are  offered  to  the  employers  to  encourage 
the  introduction  of  their  plan  in  shops  and  mills.  The 
language  of  the  advertisement  is  quoted : 

This  form  of  insurance  *is  50  per  cent,  cheaper  than  any  other 
form  of  workmen's  collective  insurance  that  has  ever  been  offered. 
We  save  from  25  to  50  per  cent,  on  the  cost  of  your  employers'  lia- 
bility insurance  by  introducing  this  form  of  insurance  in  your  plant. 

In  the  policy  occurs  a  clause  which  shows  how  cost  of 
employers'  liability  is  reduced: 

The  acceptance  by  an  employee,  or  any  other  person  who  may  be 
entitled  thereto,  of  a  benefit  under  this  policy  for  injury  or  death  of 
the  employee,  shall  operate  as  a  release  of  all  claims  for  damages 
against  the  assured  arising  from  such  injury  or  death  which  could  be 


PRIVATE  INSURANCE  COMPANIES  177 

made  by  or  through  the  employee,  or  any  other  person,  and  the  person 
so  accepting  the  benefit  shall  execute  such  further  instruments  as  may 
be  necessary  formally  to  evidence  such  acquittance. 

This  form  of  policy  is  increasingly  objectionable  to 
workingmen,  particularly  where  the  employer  contributes 
little  or  nothing  to  the  premium,  and  it  is  becoming  every 
day  more  unpopular.  The  workmen  declare  that  it  is  unjust 
to  ask  them  to  make  heavy  sacrifices  in  loss  of  a  portion  of 
wages  to  build  up  a  fund  for  insurance  and  then  deprive 
them  of  enjoying  it  in  case  of  injury  unless  they  sign  away 
their  common-law  rights  to  sue  the  employer  for  damages 
due  to  his  negligence.  This  objection  would  lose  its  point 
if  the  employer  contributed  a  sum  substantially  equal  to  that 
he  must  pay  to  protect  himself  from  loss  under  the  liability 
law. 

The  New  Amsterdam  Casualty  Co.  has  had  some  ex- 
perience with  industrial  insurance  of  the  kind  under  consid- 
eration. The  agreement  with  the  insured  is  to  indemnify 
against  loss  from  bodily  injuries  sustained  by  an  employee 
or  employees  of  the  insuring  employer  through  external, 
violent,  and  accidental  means,  while  actually  engaged  in  the 
occupations  and  at  the  places  mentioned  in  the  schedule,  and 
resulting  from  the  operation  of  the  trade  or  business  des- 
scribed  in  the  schedule.  The  president  of  this  company  says 
of  this  form  of  policy: 

Workmen's  collective  insurance  is  wholesale  accident  insurance, 
the  policy  running  to  the  employer,  and  the  protection  thereunder 
being  for  the  workmen  whether  the  employer  be  legally  liable  for  the 
injuries  or  not.  In  some  cases  the  employer  assesses  the  premium  back 
on  the  men  by  deducting  all  or  part  of  it  from  the  wages,  a  certain  per- 
centage being  deducted  on  each  pay  day.  The  insurance  company, 
however,  assumes  the  full  burden  of  reimbursing  the  men  for  injuries 
such  as  are  covered  by  the  policy.8 

8  Letter  of  Mr.  W.  F.  Moore,  April  27,  1906. 


178  INDUSTRIAL  INSURANCE 

The  net  premiums  of  this  company  by  years  have  been 
as  follows : 

Year  Premiums 

1899 $  2,322.97 

I9OO I3,6l8.IO 

^901 4,757-13 

1902 4,355-lS 

1903 3,15646 

1904 2,38l.75 

1905 3,269.15 


$33,86074 

Insurance  of  individual  workmen. — Some  of  the  casualty 
companies  do  not  attempt  to  do  business  among  working- 
men  but  confine  themselves  to  selected  risks  with  persons  of 
larger  income  who  pay  yearly  and  thus  receive  the  benefit  of 
lower  cost  for  administration  and  for  being  in  a  less  hazard- 
ous class.  Companies  which  insure  working  men  must,  as  a 
rule,  collect  the  premiums  monthly  in  small  amounts.  This 
increases  cost  of  solicitation  and  collection  which  must  be 
charged  in  the  premiums.  And  since  the  policy  must  be 
renewed  each  year  the  cost  of  solicitation  is  still  more 
increased.  Under  the  plan  of  insuring  individual  workmen 
the  company  deals  wth  the  insured  more  or  less  directly, 
although  arrangements  are  sometimes  made  with  employers 
to  collect  the  premiums,  in  which  case  the  collective  form 
is  closely  approached.  Sickness  insurance  is  usually  con- 
nected with  accident  policies  and  cannot  otherwise  be  ob- 
tained. 

The  Standard  Life  and  Accident  Insurance  Co.  of 
Detroit,  Mich.,  may  be  used  for  illustration.  ( Fide  Instruc- 
tions of  March,  1906.)  This  company  employs  agents  to 
solicit  business,  and  it  has  local  agents  in  towns  and  cities, 
not  for  the  purpose  of  calling  upon  the  policy-holders  but 
for  furnishing  convenient  means  of  collecting  premiums. 


PRIVATE  INSURANCE  COMPANIES  179 

A  drug  store  is  preferred  for  a  local  agency  because  it  is 
open  in  the  evening.  A  commission  of  5  per  cent,  is  allowed 
the  collector  for  receipting  and  remitting  the  premiums  of 
policy-holders.  Women  between  the  ages  of  eighteen  and 
forty-five  engaged  in  occupations  from  which  they  derive  a 
regular  income,  and  on  which  they  depend  for  support,  will 
be  granted  insurance  in  the  sum  of  $25  per  month  accident 
and  illness  indemnity,  with  $200  accidental  death  insurance 
for  a  premium  of  $i  per  month.  Those  desiring  larger 
indemnities  must  be  classified  according  to  occupation  and 
pay  a  premium  50  per  cent,  higher  than  that  specified  in  the 
rate  table.  In  no  event  will  they  be  written  for  more  than 
$50  per  month  accident  and  $40  per  month  illness  benefit, 
nor  to  exceed  three-fourths  of  their  average  income.  Over- 
insurance  is  avoided  in  all  cases.  The  indemnity  should  not 
exceed  three- fourths  of  the  average  actual  money  value  of 
the  insured's  time,  or  of  the  amount  of  his  monthly  salary 
or  wages.  The  insurance  is  not  forfeited  by  change  of 
occupation,  but  in  the  event  of  receiving  an  injury  when 
engaged  in  a  more  hazardous  occupation,  the  sum  insured 
and  the  monthly  indemnity  will  be  for  such  amounts  as  the 
premium  paid  shall  be  sufficient  to  purchase  at  the  rates 
fixed  by  the  company  tables  for  such  increased  hazard  of 
occupation.  Insurance  is  not  written  on  any  person  who  is 
under  seventeen  years  or  over  sixty.  Applicants  between 
fifty  and  sixty  pay  50  per  cent,  additional  premium.  There 
is  no  graduation  of  premiums  between  seventeen  and  fifty 
years.  The  beneficiary  must  have  an  insurable  interest  in 
the  life  of  the  insured,  as  wife,  child,  parent,  or  other  heir- 
at-law,  or  must  be  a  dependent  relative,  fiancee,  or  a  chari- 
table institution.  In  case  of  accidental  injury  to,  or  sickness 
of,  any  person  insured  in  this  company,  for  which  a  claim 
is  likely  to  be  made,  immediate  notice  must  be  given.  Pay- 
ments of  claims  are  made  by  check  to  the  insured  or  agent 


i8o  INDUSTRIAL  INSURANCE 

after  investigation  and  adjustment.  Surgeons  are  appointed 
in  localities  where  the  business  is  large  enough  to  warrant 
such  an  appointment,  and  their  duty  is  to  protect  the  inter- 
ests of  the  company.  Premiums  are  payable  monthly  in 
advance  at  the  home  or  branch  office.  The  detailed  defini- 
tion of  accident  indemnity  is  significant.  Full  accident 
indemnity  is  paid  for  accidental  death,  loss  of  one  or  more 
limbs,  or  both  eyes,  and  for  loss  of  time,  resulting  from 
bodily  injuries  caused  solely  by  external,  violent,  and  acci- 
dental means  such  as  dislocation,  fractures,  broken  bones, 
bruises,  cuts,  shot  wounds,  crushing  or  mangling,  burns  or 
scalds,  bites  of  dogs  and  serpents,  stroke  of  lightning, 
drowning,  or  injuries  produced  by  falls,  or  any  other  purely 
accidental  injury  happening  to  the  insured  in  any  of  the 
lawful  vocations  of  life,  whether  such  accident  happen  at 
home,  or  in  the  office,  going  to  or  from  work,  in  the  store, 
factory,  shop,  mill,  yard,  or  on  the  street  or  farm,  traveling 
on  passenger  trains,  street  cars,  steamboats,  walking,  riding, 
driving,  boating,  etc.,  but  will  not  be  paid  except  at  one-fifth 
the  indemnity  otherwise  stated,  in  case  of  disappearance,  or 
suicide,  sane  or  insane;  nor  for  any  injury,  fatal  or  non- 
fatal,  resulting  wholly  or  partly,  directly  or  indirectly,  from 
intoxication  or  the  use  of  narcotics,  or  while  violating 
law,  war  risks,  inhalation  of  gas,  vapor,  or  anaesthetic, 
voluntary  over-exertion,  wilful  or  gross  negligence,  un- 
necessary exposure  to  apparent  danger,  surgical  operations 
not  necessitated  solely  by  injury  and  made  within  ninety 
days  after  the  accident.  Sick  indemnity  is  paid  for  the  time, 
after  the  first  week,  that  the  insured  is  necessarily  confined 
to  the  house  by  reason  of  any  disease  or  illness,  except 
rheumatism,  paralysis,  lumbago  or  lame  back,  hernia, 
orchitis,  sciatica,  insanity,  dementia,  and  venereal  diseases, 
which  would  be  covered  by  one-fifth  the  regular  indemnity. 
Some  risks  are  prohibited ;  the  following  will  not  be  accepted 


PRIVATE  INSURANCE  COMPANIES 


181 


for  insurance  on  any  terms :  Persons  who  are  blind,  deaf, 
dumb,  feeble-minded,  cripples,  intemperate,  disreputable,  or 
persons  without  visible  means  of  support,  those  engaged  in 
gambling,  in  handling  highly  inflammable  or  highly  ex- 
plosive material  in  factory  or  warehouse,  aeronauting, 
driving,  submarine  working,  rubber  grinding  or  mixing; 
electricians  handling  live  wires  or  working  about  machines 
where  it  is  possible  to  receive  a  direct  current  of  500  volts, 
or  an  alternating  current  of  250  volts ;  professional  baseball 
players,  laborers  or  machinists  employed  in  constructing 
tunnels  or  caissons;  soldiers  or  sailors  engaged  in  active 
warfare;  blasters,  insane  persons,  persons  compelled  to  use 
a  crutch,  subject  to  fits  or  vertigo,  who  have  suffered  from 
paralysis,  or  are  paralyzed,  or  have  any  deformity  that  will 
in  any  way  hinder  the  regular  duties  of  life;  powder-makers, 
circus  performers,  fishermen  on  the  sea,  fireworks'  em- 
ployees and  employers,  cartridge  makers,  football  players. 
There  are  ten  classes  of  risks;  select,  preferred,  extra- 
preferred,  ordinary,  extra-ordinary,  medium,  extra-medium, 
hazardous,  special  hazardous,  and  there  is  a  table  of  in- 
demnity and  cost  for  each  class.  Thus  the  table  of  indem- 
nity and  cost  for  the  select  class  is : 

TABLE  IX 


Monthly 
Accident 
Indemnity 

Monthly 
Illness 
Indemnity 

Accidental 
Death  <5r 
Loss  of  Two 
Limbs  or 
Both  Eyes 

Loss  of 
One  Limb 

Cost  per 
Month, 
Regular 
Policy 

Cost  per 
Month, 
Special 
Policy 

I  

2  

3  
4  

$50 

60 
60 
70 
80 

$50 
40 
60 
60 

CQ 

$   500 
600 
600 
700 
800 

$250 
300 
300 

35° 
400 

$I.OO 
I.  00 

1-25 

1.40 

I    ?O 

$1.50 
1.50 

i-75 
1.90 

2    OO 

^ 

80 

60 

800 

dOO 

ilo 

2    IO 

7. 

TOO 

60 

I  OOO 

C.OO 

I    7  C. 

2    2^ 

Additional  accidental  death  insurance  will  be  written 


182 


INDUSTRIAL  INSURANCE 


in  this  class  at  25  cents  per  month  for  each  $500.     Appli- 
cants over  fifty  years  of  age  must  pay  50  per  cent.  more. 
The  table  of  the  special  hazardous  class  is : 

TABLE  x 


Monthly 
Accident 
Indemnity 

Monthly 
Illness 
Indemnity 

Accidental 
Death  or  Loss 
of  Two  Limbs 
or  Both  Eyes 

Loss  of  One 
Limb 

Cost  per 
Month,  Regular 
Policy 

Cost  per 
Month,  Special 
Policy 

$15 

$15 

$IOO 

$50 

$1.00 

$i.25 

2O 

2O 

IOO 

50 

1  .40 

I.6S 

25 

2S 

IOO 

50 

i-75 

2.OO 

3° 

3° 

IOO 

50 

2.  25 

2.50 

35 

35 

IOO 

50 

2.60 

3.10 

40 

40 

IOO 

50 

3.00 

3-50 

Additional  accidental  death  insurance  will  be  written  in 
this  class  at  $i  per  month  for  each  $500,  with  a  limit  of 
$1,000.  Male  applicants  over  fifty  years  of  age  must  add 
50  per  cent,  to  the  above  premiums. 

This  company  has  a  special  arrangement  for  "railroad 
instalment  insurance."  No  person  may  be  insured  under 
the  accident  policy  under  eighteen  or  over  sixty-five  years 
of  age,  nor  in  the  sickness  policy  over  sixty  years  of  age. 
The  rates  are  the  same  for  all  ages.  The  rates  for  loco- 
motive engineers  are : 

$1,000  death  benefit  and  $5  weekly  indemnity,  annual  premium,  $18.00 
$1,000  death  benefit  and  $20  weekly  indemnity,  annual  premium,  $50.40 
$2,000  death  benefit  and  $10  weekly  indemnity,  annual  premium,  $36.00 
$2,000  death  benefit  and  $20  weekly  indemnity,  annual  premium,  $57.60 

The  maximum  limit  for  engineers  is  $2,000  death  bene- 
fit and  $20  weekly  indemnity;  for  firemen,  $1,500  death 
benefit  and  $15  weekly  indemnity.  The  annual  premium  for 
weekly  indemnity  alone  is  $10.80  for  $5  or  $43.20  for  $20 
weekly  indemnity.  The  insured  gives  an  order  on  the  pay- 
master of  the  railroad  company,  according  to  previous 
contract,  and  the  premium  is  taken  out  of  the  monthly  pay. 
The  figures  of  business  in  the  year  1905  were:  accident 


PRIVATE  INSURANCE  COMPANIES  183 

premiums  received,  $818,973,  and  losses  paid,  $384,733; 
health  premiums,  $102,757,  losses,  $40,971.  The  statement 
does  not  show  how  many  were  wage-earners. 

The  Continental  Casualty  Co.  of  Chicago  does  a  large 
business  in  accident  insurance.  In  the  year  1905  it  collected 
from  wage-earners  in  premiums  $1,675,000;  of  this  sum 
about  $500,000  was  collected  upon  the  industrial  or  "one- 
dollar-per-month  plan."  This  company  has  already  paid 
out  to  wage-earners  for  death  benefits,  sickness,  and  acci- 
dent indemnities  over  $5,615,000. 

Experiments  are  tried  with  various  forms  of  sickness 
insurance  and  provision  for  invalidism.  In  discussing  the 
burial  benefit  companies  ("industrial  insurance")  we  have 
seen  that  after  an  effort  to  unite  sickness  insurance  with 
their  business  they  abandoned  the  attempt,  although  the 
assessment  companies  studied  by  Forman  in  Washington 
still  offer  sick  benefits  in  some  policies.  The  chief  difficulty 
in  the  experience  of  the  most  important  companies  was  that 
there  was  no  check  on  malingering  and  the  cost  was  too 
high.  Their  officers  thought  that  only  in  moderately  small 
groups  of  fraternal  societies  would  sickness  insurance  be 
practicable.  The  Health  Insurance  Co.  of  Philadelphia  and 
several  companies  in  Massachusetts  attempted  to  furnish 
sickness  insurance  about  1847.  The  Philadelphia  company 
started  with  a  capital  of  $100,000  in  1848,  used  the  tables 
of  the  English  friendly  societies  as  a  basis  of  calculation, 
and  charged  from  $5.25  to  $6.25  for  a  weekly  indemnity  to 
cover  loss  from  any  kind  of  disease.  Although  commissions 
of  agents  were  then  very  much  lower  than  they  could  be 
now  all  these  experiments  ended  in  failure.  Similar  experi- 
ments and  attempts  in  various  parts  of  the  country  came  to 
the  same  inglorious  end;  but  so  great  is  the  need  of  such 
insurance,  so  disastrous  the  effects  of  being  without  protec- 
tion, it  was  inevitable  that  the  experiment  should  be  revived 


184  INDUSTRIAL  INSURANCE 

in  some  form.  About  1896  some  company  introduced  as  a 
"rider"  to  an  accident  insurance  policy  an  agreement,  for 
a  consideration,  to  pay  indemnity  in  case  of  six  zymotic 
diseases.  This  bait  for  accident  insurance  proved  so 
attractive  to  customers  that  about  1899  several  companies 
extended  the  list  of  diseases  to  ten  or  twelve,  at  a  premium 
rate  of  $2  for  each  $5  of  weekly  indemnity,  and  under  stress 
of  competition  among  accident  insurance  companies  the  list 
was  still  further  enlarged  until  about  thirty  or  more  were 
covered.  Experience  taught  the  companies,  for  a  rather 
high  tuition  fee,  that  some  of  them  had  not  charged  enough 
for  certain  diseases  to  cover  their  risk  and  that  the  attempt 
to  distinguish  the  nature  of  the  sickness  added  to  the  con- 
fusion and  cost  attending  adjustment  of  claims.  To  meet 
this  situation  a  so-called  General  Disability  Policy  was 
introduced. 

There  can  be  no  doubt  that  a  policy  cohering  any  sickness  origi- 
nating in  an  individual  after  the  beginning  of  his  policy  will  afford 
less  cause  for  misunderstanding  and  disagreement  between  the  com- 
pany and  its  policy-holders,  and  that  physicians  will  be  less  frequently 
called  upon  to  stretch  their  consciences  in  diagnoses  for  the  pur- 
pose of  assisting  their  patients,  than  has  been  the  case  with  the 
restricted  sickness  policy,  and  since  many  of  the  companies  have  taken 
up  sickness  insurance  as  an  adjunct  to  accident  insurance,  merely  as 
a  means  of  holding  their  accident  insurance  against  the  aggressions 
of  competing  companies,  any  plan  likely  to  secure  this  result  with  a 
minimum  of  friction  and  misunderstanding  between  the  company  and 
the  assured  would  seem  to  commend  itself  to  the  underwriter  if  the 
cost  does  not  prove  to  be  too  much  of  a  tax  upon  the  business  which 
it  is  intended  to  protect.9 

Another  suggestion  has  been  made  to  diminish  the  cost 
of  sickness  insurance  by  connecting  it  with  other  kinds  of 
insurance.  It  is  evident  that  if  one  fee  for  soliciting  and 
adjusting  claims  could  be  made  to  cover  all  forms  of  insur- 

8  R.  S.  Keelor,  M.D.,  American  Experience  with  Invalidity,   1904. 


PRIVATE  INSURANCE  COMPANIES  185 

ance  desired,  the  sum  of  cost  would  be  reduced,  especially 
if  the  fee  for  solicitation  did  not  have  to  be  paid  over  each 
year.  At  present  the  company  retains  the  right  to  stop  pro- 
tection at  the  end  of  any  year  or  to  increase  the  rate  with 
age  until  it  becomes  prohibitive.  Furthermore  the  benefit 
is  limited  to  a  relatively  brief  period,  usually  twenty-six 
weeks,  while  the  need  is  for  indemnity  as  long  as  sickness 
lasts.  Mr.  Dawson  recommends  that  sickness  insurance 
be  joined  with  life  insurance,  for  thus 

it  is  possible  to  furnish  at  a  much  lower  cost,  because  of  lower  expense 
in  the  payment  of  commissions,  indemnity  for  the  whole  course  of 
the  disability,  renewable  without  increase  of  premiums  and  at  the 
option  of  the  insured.  Abundant  statistics  upon  which  to  base  these 
rates  are  now  obtainable.10 

Information  from  the  mining  region  of  the  western 
states  is  difficult  to  secure,  and  therefore  the  statement  of 
the  superintendent  of  social  welfare  of  the  Colorado  Fuel 
and  Iron  Co.,  Pueblo,  Colo.,  is  welcome. 

This  company  provides  medical  attendance  and  hospital  care  for 
its  employees  and  their  families  as  long  as  they  are  sick,  for  which 
the  men  pay  $i  per  month.  Privileges  of  the  hospital,  however,  are 
extended  only  to  the  employees  and  not  to  their  families,  but  a  special 
rate  is  given  to  members  of  employees'  families.  All  medical  attend- 
ance outside  of  the  hospital,  including  medicines,  is  furnished  both  to 
the  men  and  to  their  families.  Some  years  ago  this  company  attempted 
to  insure  its  miners  against  accidents,  but  the  plan  was  not  successful 
and  so  the  plan  at  present  followed  by  this  and  all  other  mining  cor- 
porations in  Colorado  is  to  permit  the  agents  of  reliable  insurance 
companies  to  go  into  the  mines  and  solicit,  the  company  guaranteeing 
the  agents  the  amount  of  premium  which  is  then  deducted  from  the 
men's  pay-roll.  The  foreign  miners  also  have  a  number  of  sick  benefit 
societies,  but  they  do  not  play  a  very  prominent  part  in  the  matter 
of  insurance,  as  they  are  usually  small  organizations.11 

10  The  Business  of  Life  Insurance,  p.  244. 

11  Letter  of  Dr.  R.  W.  Corwin. 


186  INDUSTRIAL  INSURANCE 

One  point  deserves  special  mention  in  connection  with 
the  assertion  that  compulsory  insurance  would  be  impossible 
unless  all  states  introduced  it  at  the  same  time,  since  the 
manufacturers  of  the  state  having  compulsory  insurance 
would  have  to  carry  heavier  premiums  than  the  managers 
in  states  which  have  not  such  laws.  A  part  answer  to  this 
argument  is  found  in  the  fact  that  already  the  cost  of  acci- 
dents must  be  borne  in  gifts,  taxes  for  poor  relief,  and 
various  schemes  to  which  employers  contribute  for  the  relief 
of  disabled  men ;  and  further,  it  may  be  claimed  that  insur- 
ance so  greatly  increases  the  contentment,  steadiness,  and 
efficiency  of  the  insured  workmen  that  premiums  are  largely 
returned  in  an  equivalent  of  some  kind.  It  may  be  added 
that  if  compulsory  insurance  were  introduced  in  one  state 
its  advantages  would  soon  be  seen  to  be  so  great  that  public 
sentiment,  reinforced  by  trade  unions,  would  speedily  make 
the  law  general  in  all  industrial  states.  Still  further,  it  is 
precisely  those  states,  as  Massachusetts  and  New  York, 
which  lead  in  social  legislation  which  retain  the  first  rank 
as  industrial  states.  To  all  this  we  may  add  certain  facts 
furnished  by  casualty  companies,  which  tend  to  diminish 
the  fears  of  timid  capitalists  that  compulsory  insurance 
would  place  them  at  a  disadvantage  as  compared  with  the 
employers  of  other  states;  the  fact  being  that  already,  in 
consequence  of  the  differences  of  court  interpretation  and 
legislation,  the  cost  of  employers'  protection  varies  greatly 
in  different  states,  without  any  of  the  dreadful  things  hap- 
pening which  are  feared.  Thus  if  we  take  the  cost  of 
liability  insurance  for  the  whole  country  as  one,  on  the 
average,  the  cost  for  several  states  would  be  relatively  as 
follows : 

The  figures  are  stated  on  a  basis  of  a  loss  cost  of  i  for 
the  United  States  as  a  whole.  If  then  the  relative  loss  cost 
of  a  state  is  given  as  1.2,  the  meaning  is  that  the  loss  cost 


PRIVATE  INSURANCE  COMPANIES 


187 


in  that  state  is  twenty  per  cent.  (20  per  cent.)  greater  than 
for  the  United  States  as  a  whole.  A  relative  loss  of  2 
designates  a  loss  cost  twice  as  great  as  that  for  the  United 
States  as  a  whole.  A  relative  loss  cost  of  .80  designates  a 
loss  cost  eighty  per  cent.  (80  per  cent.)  of  that  for  the 
United  States  as  a  whole. 

The  loss  cost  of  one  state  relatively  to  another  may  be 
ascertained  by  taking  the  ratio  of  their  relative  loss  cost. 
Thus,  the  loss  cost  in  Tennessee  is  four  times  as  great  as 
the  loss  cost  in  Pennsylvania,  the  relative  loss  cost  of  Ten- 
nessee being  2,  that  of  Pennsylvania  being  0.50,  and  the 
ratio  2-^4—0.50. 

TABLE  OF  RELATIVE  LOSS  COSTS  TO  EMPLOYERS  IN  THE 
SEVERAL  STATES  BY  REASON  OF  THE  LIABILITY  IMPOSED 
BY  LAW  UPON  THEM  FOR  DAMAGES  ON  ACCOUNT  OF 
BODILY  INJURIES  OR  DEATH  ACCIDENTALLY  SUFFERED 
BY  THEIR  EMPLOYEES* 

TABLE  OF  STATES  LISTED  ALPHABETICALLY 


Alabama 1.20 

Arizona  Territory. .  2 .  oo 

Arkansas 1.33 

California i .  oo 

Colorado 2 .  oo 

Connecticut 60 

Delaware 1.33 

Dist.  of  Columbia     .90 

Florida 60 

Georgia i.  20 

Idaho 2.00 

Illinois 1.33 

Indiana i .  20 

Indian  Territory . . .  2 .  oo 

Iowa 1.33 

Kansas ...  .  .  2 .  oo 


Louisiana 70 

Maine i.oo 

Maryland 70 

Massachusetts i .  oo 

Michigan 60 

Minnesota i .  33 

Mississippi 80 

Missouri J-33 

Montana 2 .  oo 

Nebraska i .  33 

New  Hampshire. . .  i .  oo 

New  Jersey 70 

New  Mexico  Ter.  .  2 .  oo 

Nevada 2.00 

New  York i .  oo 

North  Carolina. . . .  i .  20 
North  Dakota 2 .  oo 


Ohio 80 

Oklahoma  Ter 2. oo 

Oregon 80 

Pennsylvania i .  oo 

Rhode  Island i .  33 

South  Carolina. . .  .  i .  20 

South  Dakota 2. oo 

Tennessee 2 .  oo 

Texas 2.00 

Utah 2 .  oo 

Vermont i .  oo 

Virginia 70 

Washington 2 .  oo 

West  Virginia 70 

Wisconsin 1.33 

Wyoming 2 .  oo 


Kentucky 1.33 

*  Frank  E.  Law,  A  Method  of  Deducing  Liability  Rates  (1908). 

The  differences  between  the  states  are  due  to  differences 
in  the  law  and  in  the  judicial  decisions  interpreting  the  law. 

The  above  table  is  founded  in  the  main  on  combined 
experience  of  the  companies  composing  the  Liability  Con- 
ference, an  association  of  companies  engaged  in  the  business 


i88  INDUSTRIAL  INSURANCE 

of  liability  insurance.  Where  changes  in  the  law  have 
occurred  subsequent  to  the  period  embraced  by  the  experi- 
ence, comparative  studies  of  the  laws  have  been  made  and 
corrections  made  in  the  table  accordingly.  The  table  repre- 
sents accurately  the  relative  costs  at  the  date  of  writing. 
The  ratios  are  constantly  changing. 

It  is  worth  while  to  consider  the  probable  part  which  the 
casualty  companies  will  play  in  the  immediate  future  in  rela- 
tion to  the  development  of  accident  and  sickness  insurance, 
especially  if  permissive  or  compulsory  laws  should  be  passed 
in  any  of  the  states.12  This  matter  has  already  been  seriously 
considered.  It  is  well  known  that  in  England  under  the 
Compensation  Act  and  recently  in  France  under  a  com- 
pulsory-insurance law,  the  private  accident  companies  have 
done  a  thriving  business  in  assuming  the  legal  obligations 
of  the  employers.  In  France  the  mutual  insurance  associa- 
tions or  syndicates,  and  even  the  government  itself,  through 
a  central  fund,  are  competitors  of  the  private  companies, 
and  yet  the  latter  hold  their  own  and  contribute  very  sub- 
stantially to  the  promotion  of  the  purposes  of  the  law. 
Nor  are  we  entirely  without  experience  in  the  United  States, 
for  the  workmen's  collective  policies  contain  suggestions  of 
a  method  which  may  be  greatly  extended  if  legal  pressure 
or  even  encouragement  were  to  make  it  to  the  interest  of 
large  bodies  of  employers  and  wage-earners  to  unite  in 
securing  protection.  Already  under  the  collective  policies 
the  expenses  of  solicitation  have  been  reduced  to  a  minimum, 
since  the  entire  body  of  employees  is  included  at  a  stroke 
under  a  contract  which  also  lowers  the  cost  of  payments  of 

12  Mr.  H.  G.  B.  Alexander,  president  of  the  Continental  Casualty 
Company  of  Chicago,  stated  at  a  meeting  of  the  International  Association 
of  Accident  Underwriters,  that  the  accident  and  health  insurance  com- 
panies had  collected  $25,700,000  in  the  United  States  in  1906,  this  being  a 
gain  of  $2,783,000  over  the  preceding  year.  Health  insurance  showed  an 
increase  of  28.8  per  cent,  and  accident  insurance  of  9.57  per  cent. 


PRIVATE  INSURANCE  COMPANIES  189 

premiums  by  the  simple  process  of  deducting  them  from  the 
wages.  Uncertainty  in  regard  to  the  indemnity  would  be 
reduced  by  legal  definition  of  obligation  and  by  simpler 
judicial  organization  for  the  adjustment  of  disputed  claims. 
If  the  employers  could  be  released  from  liability  under  exist- 
ing laws  they  could  then  have  at  their  disposal  a  large  fund 
which  they  are  now  compelled  to  expend  on  casualty  com- 
panies and  lawyers  to  protect  themselves  against  suits  for 
negligence ;  and  the  insurance  companies  would  then  become 
insurers  of  the  working-men  rather  than  their  sworn 
antagonists. 


CHAPTER  VII 
FIRMS  AND  CORPORATIONS 

In  this  article  railroad  relief  departments  are  excluded 
from  consideration  as  they  are  treated  in  the  next  chapter. 
The  relation  between  the  two  movements  is  very  inti- 
mate. Before  the  railroads  undertook  their  relief  depart- 
ments experiments  had  been  made  on  a  small  scale  by 
private  firms,  and  when  the  railroads  had  developed  their 
plans  with  manifest  advantage  the  employers  of  smaller 
numbers  of  men  in  turn  enlarged  their  schemes  and  multi- 
plied their  number.  Meantime  the  size  of  manufacturing 
plants  has  rapidly  increased,  until  now  many  of  them  rival 
railroad  corporations  in  the  magnitude  of  their  enterprises 
and  the  number  of  employees.  Some  of  the  corporations 
also  resemble  the  railroads  in  their  prospects  of  permanence^ 
without  regard  to  the  persons  who  own  their  stocks  and  tem- 
porarily control  their  policies.  This  condition  of  affairs  is 
favorable  to  the  introduction  of  plans  of  old-age  pensions, 
and  especially  of  sickness  and  accident  insurance.  During 
the  years  1905-8  there  has  been  a  marked  increase  in  the 
amount  of  attention  given  to  the  development  of  such 
schemes.  This  has  been  due  to  various  causes ;  and,  first  of 
all,  to  the  examples  of  success  in  the  railroad  relief  depart- 
ments. Another  cause  has  contributed  powerfully  to  this 
tendency  and  will  continue  to  operate  with  increasing  mo- 
mentum until  compulsory  insurance  makes  it  unnecessary. 
That  cause  is  the  tightening  of  the  employers'  liability  laws 
and  the  strictness  and  even  rigor  with  which  they  are  inter- 
preted by  many  courts  and  applied  in  individual  instances. 
It  has  been  said  by  certain  judges  in  high  places  that  with 
a  little  more  stringency  the  courts  will  practically  make  the 

190 


FIRMS  AND  CORPORATIONS  191 

law  of  negligence  a  compulsory  insurance  law,  for  the  fact 
of  accident  seems  to  carry  with  it  in  such  courts  a  presump- 
tion of  negligence.  The  juries  very  generally  act  on  this 
presumption,  and  elective  judges,  being  human,  are  inclined 
to  lean  to  the  side  of  the  workmen,  whose  votes  are  neces- 
sary to  elect  them.  This  tendency  has  received  further 
momentum  from  the  exposures  of  the  frightful  waste  of 
life  due  to  industrial  accidents  and  diseases  revealed  by 
factory  inspectors,  reports  of  trade-unions,  and  by  the  Inter- 
state Commerce  Commission.  Public  opinion  has  been 
thoroughly  aroused  and  will  not  bear  much  more;  it  will 
soon  demand  all  the  protection  that  law  can  give  to  prevent 
injury  and  to  compel  each  industry  to  bear  its  own  costs. 
The  exhibits  of  dangerous  machinery,  sweatshop  evils,  and 
tenement-house  life  in  various  cities  have  deepened  these 
convictions  and  directed  public  attention  to  remedies.  The 
expositions  of  the  German  government  at  Chicago  in  1893 
and  at  St.  Louis  in  1904  have  had  their  share  in  educating 
the  public  conscience  and  revealing  a  practicable  plan  for 
mitigating  the  sufferings  incident  to  modern  industry. 

It  is  almost  impossible  to  tabulate  the  schemes  of  insur- 
ance here  to  be  noticed;  we  shall  describe  certain  examples 
and  then  endeavor  to  discover  the  tendency  revealed  in  them 
all.  Until  the  government  report  has  been  given  to  the 
world  we  shall  not  have  anything  like  a  complete  catalogue 
of  all  these  plans,  but  we  have  enough  typical  illustrations 
to  furnish  insight  into  the  forces  at  work. 

The  Westinghouse  Air  Brake  Company  Relief  Depart- 
ment, Wilmerding,  Pa,,  was  established  in  1903.  The 
company  has  charge  of  the  relief  department,  is  responsible 
for  the  funds,  pays  4  per  cent,  interest  on  deposits,  supplies 
facilities  for  office  work,  and  pays  operating  expenses.  The 
medical  examiner  is  appointed  by  the  general  manager.  The 
advisory  committee  is  chosen,  one-half  by  the  company  and 


192  INDUSTRIAL  INSURANCE 

one-half  by  the  members,  the  general  manager  being 
chairman.  The  relief  fund  is  made  up  from  voluntary  con- 
tributions of  members,  income  from  investments,  and  contri- 
butions by  the  company  when  necessary  to  make  up 
deficiencies.  The  members  are  divided  into  five  wage 
classes:  first,  those  receiving  less  than  $35  per  month;  sec- 
ond, those  receiving  $35  to  $55;  third,  those  receiving  $55 
to  $75 ;  fourth,  those  receiving  $75  to  $95 ;  fifth,  those  re- 
ceiving $95  and  more.  No  employee  is  required  to  become 
a  member  of  the  relief  fund,  and  any  member  may  withdraw 
after  giving  due  notice.  Usually  a  person  loses  membership 
when  he  for  any  reason  ceases  to  be  an  employee.  The 
monthly  contributions  are  50,  75,  100,  125,  150  cents  accord- 
ing to  wage  class.  The  occasion  for  indemnity  is  disability 
due  to  either  sickness  or  accident,  and  the  medical  examiner 
decides  the  question  of  disability.  Benefits  are  not  paid 
longer  than  thirty-nine  weeks,  although  the  right  to  death 
benefit  continues  during  disability.  Settlement  may  be  paid 
in  a  lump  sum.  No  benefits  are  paid  where  disability  is 
due  to  intemperance,  vice,  or  quarrel.  The  benefits  each 
week  for  thirty-nine  weeks  are,  according  to  class :  $5, 
$7.50,  $10,  $12.50,  $15,  and  surgical  treatment  is  also  given 
free.  Injuries  sustained  while  off  the  premises  of  the  com- 
pany come  under  the  rules  of  sickness  benefits.  The  usual 
release  clause  in  the  contract  reads : 

The  acceptance  by  the  members  of  benefits  for  injury  shall  operate 
as  a  release  and  satisfaction  of  all  claims  against  the  company  for 
damages  arising  from  or  growing  out  of  such  injury;  unless,  within 
ten  days  from  date  of  injury,  notice  is  given  to  the  superintendent 
of  intention  to  seek  indemnity  from  the  company;  and  further,  in  the 
event  of  the  death  of  a  member,  no  part  of  the  death  benefit  or 
unpaid  disability  benefit  shall  be  due  or  payable  unless  and  until  good 
and  sufficient  releases  shall  be  delivered  to  the  superintendent,  of  all 
claims  against  the  relief  department  as  well  as  against  the  company, 
arising  from  or  growing  out  of  the  death  of  a  member. 


FIRMS  AND  CORPORATIONS  193 

The  death  benefit  is  $150,  not  much  more  than  a  sum 
necessary  for  expenses  of  illness  and  burial.  Evidently  this 
plan  is  accepted  by  the  employees  only  because  it  is  better 
than  nothing  or  because  they  do  not  yet  know  what  Euro- 
pean laws  secure  to  wage-earners. 

The  Pittsburgh  Coal  Company  Employees'  Association.1 
This  company  has  a  capital  of  more  than  $100,000,000 
and  an  annual  tonnage  of  $25,000,000.  The  theory  of  the 
managers  relating  to  the  necessity  for  industrial  insurance 
is  distinctly  set  forth  in  their  circular,  in  which  the  depend- 
ence of  workingmen  upon  wages  is  made  the  ground  of  a 
scheme  of  protection  by  co-operation : 

In  the  new  order  of  things  the  percentage  of  managers  and  opera- 
tives, whose  capital,  as  well  as  their  brains  and  hands,  is  employed  in 
a  given  business,  is  largely  reduced,  and  there  is  a  corresponding 
increase  in  the  percentage  of  those  whose  only  interest  in  the  business 
is  their  daily,  weekly  or  monthly  wage  allowance. 

This  company  attempts  to  give  its  employees  a  share 
in  the  capital  by  selling  them  stock  on  contracts  to  pay  for 
the  shares  $i  each  month.  In  the  report  used  1,000  con- 
tracts for  8,400  shares  are  mentioned.  This  scheme  is  called 
"profit  sharing."  There  is  an  elaborate  plan  of  insurance 
and  old-age  pensions.  At  each  mine  a  "lodge"  is  organized, 
but  membership  is  voluntary.  The  dues  are  40  cents  per 
month.  The  benefits  are:  (i)  in  case  of  fatal  accident 
while  at  work,  $150,  of  which  the  company  pays  one-half; 
(2)  in  case  of  death  from  natural  causes,  $100,  paid  alto- 
gether by  the  employees;  (3)  in  case  of  death  of  wife,  or 
parent,  if  dependent  on  employee,  a  funeral  benefit  of  $75, 
all  paid  by  employees;  (4)  in  case  of  death  of  children 
of  employees,  if  over  two  and  under  twelve  years,  funeral 
benefit  of  $25,  paid  by  employees;  (5)  in  case  of  a  non- 
fatal  accident  of  a  serious  nature,  $10  per  week,  one-half 

1  Fifteenth  Quarterly  Report,  October,  1904. 


194  INDUSTRIAL  INSURANCE 

paid  by  the  company;  (6)  in  case  of  a  non-fatal  accident 
of  a  less  serious  nature,  $7.50  per  week,  one-third  paid  by 
the  company;  (7)  in  case  of  a  minor  accident,  $5  per  week 
paid  by  employees.  The  company  has  a  pension  fund,  to 
which  it  made  an  original  contribution  of  $10,000.  Its 
growth  and  maintenance  is  provided  for  by  monthly  dues 
of  employees,  two  cents  of  the  forty  being  set  aside  for  the 
pension  fund,  the  company  adding  one  cent.  The  fund  is 
invested  in  preferred  stock  of  the  company  and  must  remain 
intact  for  ten  years.  At  the  end  of  that  period  principal 
and  interest  in  excess  of  $100,000  may  be  used  in  the  pay- 
ment of  pensions  to  men  who  have  contributed  to  the  fund 
for  ten  years,  and  who,  through  age,  accident,  or  disease 
are  not  able  to  earn  their  livelihood.  All  expenses  of  the 
association  are  paid  by  the  company.  About  20,000  mem- 
bers are  in  the  lodges  and  about  60,000  persons  are  pro- 
tected. Up  to  April  30,  1905,  the  total  benefits  paid  had 
been  $202,770.62;  the  number  of  men  paying  premiums 
into  the  fund,  21,909.  The  pension  fund  on  April  30,  1905, 
was  $35,410.44,  of  which  the  company  had  contributed 
$14,945.95. 

Metropolitan  Street  Railway  Association,  New  York. 
Membership  is  limited  to  employees  of  the  company  and 
entrance  is  voluntary  for  employees  between  twenty-one 
and  forty-five  years  of  age.  The  monthly  dues,  50  cents, 
are  deducted  from  the  pay-roll ;  the  assessments  of  50  cents 
in  a  month,  but  not  more  than  $3  in  one  year,  may  be  levied 
to  replenish  the  treasury.  There  is  an  initiation  fee  of  $i 
and  a  fee  for  the  medical  examination.  New  members  sign 
a  contract  authorizing  the  deduction  of  premiums  from  the 
pay-roll.  The  benefit  paid  in  case  of  disability  due  to  acci- 
dent or  sickness  is  $i  per  day,  after  seven  days,  but  not 
longer  than  ninety  days  and  not  over  $90  in  all.  If  the 
disability  is  due  to  vice,  nothing  is  paid.  The  death  benefit 


FIRMS  AND  CORPORATIONS  195 

is  $300.  The  company  has  a  pension  department  whose 
scheme  went  into  effect  July  i,  1902.  This  department  is 
administered  entirely  by  representatives  of  the  company. 
Pensions  are  paid  to  all  employees  who  have  reached  the 
age  of  seventy  years,  and  to  employees  on  attaining  sixty- 
five  years  who,  after  twenty-five  years  of  service  with  this 
company,  have  been  disabled.  Only  employees  receiving 
less  than  $1,200  yearly  wages  are  admitted.  Pensioners 
must  belong  to  the  association.  The  pension  rates  are 
as  follows :  after  thirty-five  years  of  continuous  service, 
40  per  cent,  of  the  average  wages  of  the  ten  years  preced- 
ing retirement;  service  thirty  to  thirty-five  years,  30  per 
cent,  of  average  -  wages ;  twenty-five  to  thirty  years  of 
service,  twenty-five  per  cent. ;  the  same  rates  are  paid  to 
those  retiring  disabled  at  sixty-five  to  sixty-nine  years  of 
age.  If  payments  at  these  rates  require  more  than  $50,- 
ooo  annually  they  will  be  scaled  down  pro  rata.  Pen- 
sions are  payable  monthly.  No  assignment  of  pensions  is 
permitted,  and  the  pension  is  regarded  as  a  gratuity,  there 
being  no  legal  claim  for  it. 

The  employees  of  the  Crane  Co.,  Chicago,  were  organ- 
ized into  a  voluntary  relief  association  in  1893.  The  regu- 
lations of  that  association  show  a  classification  of  dues 
and  benefits  based  on  wages.  Members  whose  wages  are 
$4  per  week  pay  10  cents  a  month  and  receive  in  case  of 
disability  $2  per  week,  and  in  case  of  death  a  burial  benefit 
of  $25  is  paid;  wages  $6  per  week,  dues  25  cents  a  month, 
benefits  $4  per  week  and  burial  benefit  $50;  wages  $9  per 
week,  dues  30  cents,  benefits  $8  per  week,  death  benefit  $75 ; 
wages  $12,  dues  40  cents,  benefits  $8,  death  benefit  $100; 
wages  $15,  dues  50  cents,  benefits  $10,  death  benefit  $125; 
wages  $18,  dues  60  cents,  benefits  $12,  death  benefit  $150. 
Assessments  are  levied  at  each  death.  Where  the  disability 
is  due  to  vice,  benefits  are  refused.  This  company  estab- 


196  INDUSTRIAL  INSURANCE 

lished,  April  i,  1904,  a  plan  for  pension  and  relief,  which  is 
a  combination  of  accident,  invalidism,  and  old-age  insur- 
ance, without  legal  claim,  without  payments  from  the 
employees,  a  pure  gratuity  of  the  company,  though  demand- 
ing faithful  service  as  a  condition  of  enjoying  benefits. 

The  Macy  Mutual  Aid  Association  of  employees  of  R. 
H.  Macy  &  Co.,  New  York,  was  organized  in  1885.  The 
directors  are  appointed  by  the  company.  Membership  in 
the  association  is  a  condition  of  employment  and  member- 
ship ceases  with  employment.  The  monthly  dues  are  taken 
out  of  the  pay-roll.  After  five  days  of  illness  the  employee 
is  entitled  to  receive  benefits  not  more  than  eight  weeks 
in  one  year.  Members  cannot  claim  benefits  until  the  expira- 
tion of  twelve  months  from  the  last  payment  of  the  eighth 
benefit  paid. 

Hibbard,  Spencer,  Bartlett  &  Co.,  wholesale  hardware 
merchants,  Chicago.  The  employees  of  this  firm  have 
enjoyed  the  advantages  of  a  benevolent  association  since 
March  5,  1888,  and  quite  a  number  of  trusted  men  have 
been  permitted  to  buy  stock  of  the  corporation.  The  dues 
of  the  association  are  ten  cents  a  month,  although  some 
members  pay  $3  a  year.  The  association  had  one  hundred 
members  at  the  beginning  and  has  grown  to  have  six  hun- 
dred members.  Membership  is  voluntary.  The  firm  does 
not  agree  to  help  the  association,  but  in  fact  it  has  made 
contributions  when  needed.  During  the  first  seventeen  years 
of  its  existence  the  association  collected  about  $12,000  and 
paid  out  about  $11,400,  chiefly  in  sick  benefits,  one-half  of 
this  for  the  families  of  members.  There  are  no  expenses 
of  administration,  the  officers  caring  for  the  fund  without 
salaries.  On  January  i,  1905,  this  firm  established  an  old- 
age  pension  fund  for  the  employees.  The  plan  was  first 
proposed  to  the  employees  before  adoption  and  was  approved 
by  95  Per  cent-  of  them.  The  control  of  the  fund  is  in  the 


FIRMS  AND  CORPORATIONS  197 

hands  of  the  firm.  Membership  is  required  of  all  employees 
over  eighteen  years  of  age,  with  the  exception  of  stock- 
holders and  traveling  salesmen.  The  contributions  are  2 
per  cent,  of  the  salary  of  each  employee,  deducted  quarterly 
from  the  salary.  The  corporation  pays  into  the  fund  an 
amount  equal  to  that  contributed  by  the  employees.  The 
ordinary  pension  is  equal  to  one-half  the  average  salary  of 
the  pensioner  during  the  five  years  preceding  his  retirement 
or  disability.  If  an  employee  is  discharged  or  leaves  the 
firm,  the  amount  of  his  contributions,  together  with  interest 
at  3  per  cent.,  is  returned  to  him.  If  an  employee  remains 
and  becomes  a  pensioner  and  does  not  remain  long  enough 
on  the  pension  roll  to  draw  a  sum  equal  to  the  aggregate 
of  his  contributions,  together  with  3  per  cent,  interest,  the 
excess  is  paid  to  his  heirs.  The  report  for  the  first  year, 
rendered  January  25,  1906,  showed  receipts  from  employees, 
$10,306.79,  and  the  same  amount  from  the  firm;  with 
interest,  $190.07.  The  disbursements  were:  withdrawn  by 
retiring  employees,  $841.90;  pensions,  $302;  balance,  Janu- 
ary i,  1906,  $19,659.75. 

The  Western  Electric  Co.  employs  many  thousands  of 
workmen.  In  March,  1906,  it  created  a  pension  system. 
The  sum  of  $400,000  is  set  aside  as  a  fund.  Any  unused 
part  of  this  fund  draws  interest  from  the  company  at  the 
rate  of  4  per  cent,  per  annum.  The  president  is  authorized 
to  add  $150,000  annually  to  the  fund.  If  the  allowances 
exceed  the  income  a  new  rate  will  be  established  which  will 
proportionately  reduce  all  allowances.  The  fund  is  man- 
aged by  representatives  of  the  company.  All  employees 
of  the  company  who  have  reached  the  age  of  sixty  years 
and  have  been  twenty  years  continuously  in  the  service  of 
the  company  may  be  retired  on  pension.  Any  employee 
who  has  been  ten  years  in  the  service,  and  has  become  totally 
incapacitated  by  injury  or  sickness,  may  receive  a  pension. 


198  INDUSTRIAL  INSURANCE 

The  annual  pension  allowance  for  each  employee  retired 
for  age  shall  be :  for  each  year  of  active  service  i  per  cent, 
of  the  average  annual  pay  during  the  ten  years  next  pre- 
ceding retirement.  Pensions  are  paid  monthly  till  death, 
and  may  be  granted  to  widows  and  orphans  one  year  longer. 
The  amount  of  pension  for  age  will  depend  on  two  condi- 
tions: the  number  of  years  the  person  has  been  in  active 
service,  and  the  amount  of  his  average  wages  per  year  for 
the  ten  years  next  preceding  retirement.  For  example:  If 
the  average  pay  per  year  for  the  last  ten  years  of  an  em- 
ployee's active  service  should  equal  $900,  and  if  the  service 
has  been  continuous  for  twenty-four  years,  then  the  pen- 
sion would  be  twenty-four  per  cent,  of  $900,  or  $216  per 
year,  or  $18  per  month.  The  amount  and  duration  of 
pension  for  disability  is  determined  by  the  pension  board 
for  each  case. 

The  Gorham  Manufacturing  Co.,  of  Providence,  R.  I., 
on  May  i,  1903,  adopted  a  pension  plan,  "believing  that  it 
is  the  duty  of  every  corporation  which  has  been  in  existence 
for  50  years  to  provide  for  those  whose  terms  of  service 
have  covered  the  greater  portion  of  their  active  life."  Ac- 
cording to  a  circular  of  the  company,  employees  whose 
records  are  satisfactory  to  the  company  will,  if  disqualified 
for  work  on  account  of  age  or  permanent  ill  health,  be 
eligible  to  pensions  under  the  following  age  limits  and  terms 
of  service :  at  seventy  years,  after  twenty-five  years  of  con- 
tinuous service,  at  sixty-five  years  of  age,  after  thirty-five 
years  of  service;  at  sixty  years  of  age,  after  forty  years  of 
continuous  service.  When  the  company  is  satisfied  that  an 
employee  is  entitled  to  a  pension  he  is  to  receive  a  monthly 
sum  equal  to  i  per  cent,  for  each  year's  active  service,  com- 
puted at  the  wage  paid  at  the  time  of  enrolment,  although 
no  pension  can  exceed  $1,000  per  year.  The  fund  is  main- 
tained by  setting  aside  a  sum  equal  to  i  per  cent,  of  the 


FIRMS  AND  CORPORATIONS 


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202  INDUSTRIAL  INSURANCE 

amount  paid  for  labor  during  the  preceding  year,  and  out 
of  this  fund  pensions  are  to  be  paid.  When  the  amount 
paid  out  for  pensions  during  three  consecutive  years  shall 
exceed  by  5  per  cent,  the  appropriations  under  the  foregoing 
provision,  all  outstanding  pensions  shall  be  scaled  down  to 
come  within  the  average  of  the  three  years'  appropriation 
and  a  new  schedule  adopted  for  future  pensions.  If  such 
reduction  of  pensions  becomes  necessary,  the  original  rates 
on  outstanding  pensions  and  the  original  schedule  will  be 
resumed  whenever  the  appropriation  for  three  consecutive 
years  shall  exceed  by  5  per  cent,  the  amount  paid  for 
pensions. 

The  firm  of  G.  B.  Carpenter  &  Co.,  merchants  of  Chi- 
cago, employing  about  200  persons,  pays  about  $4,000  a 
year  in  sickness  and  accident  benefits  and  old-age  pensions. 
It  has  no  regular  system  or  association,  and  prefers  to  keep 
entire  control. 

The  Metropolitan  Life  Insurance  Co.  Staff  Savings 
Fund,  New  York  City,  was  organized  in  1904.  The  com- 
pany has  complete  control  of  the  administration  of  this 
fund,  which  is  maintained  from  contributions  of  employer 
and  employees  and  from  interest  on  deposited  sums.  The 
company  contributes  50  per  cent,  of  the  amounts  paid  by 
the  employees.  In  case  an  employee  on  account  of  age  or 
infirmity  retires  from  the  employment  he  may  receive  his 
share  with  interest  at  5-9  per  cent.  In  case  of  death  the 
heirs  receive  the  sum  to  his  credit  and  interest.  If  an 
employee  leaves  the  service  for  other  reasons  he  receives  all 
that  he  has  himself  paid  in,  with  interest,  without  claim  on 
contributions  of  the  company. 

The  schemes  of  Mr.  Alfred  Dolge  have  often  been 
described  and  must  continue  to  attract  attention  as  experi- 
ments, the  very  errors  being  instructive  for  future  experi- 
ment. The  firm  of  Alfred  Dolge  &  Son,  at  Dolgeville, 


FIRMS  AND  CORPORATIONS  203 

N.  Y.,  a  town  of  2,000  inhabitants,  employed  about  six 
hundred  persons  in  the  manufacture  of  pianos,  organs,  and 
various  materials  used  in  such  manufactures.  The  firm 
carried  about  $200,000  life  insurance  at  a  very  moderate 
rate,  for  employees  who  had  remained  witti  them  five 
years.  The  firm  paid  the  premiums.  If  the  employee 
left  the  firm  he  might  retain  his  policy  by  paying  the 
premiums.  An  employee  might  acquire  an  insurance  at  the 
age  of  twenty-six  years  for  $1,000  and  for  each  term 
of  five  years  of  service  $1,000  until  he  had  $10,000  insur- 
ance. Those  who  entered  the  service  of  the  firm  between 
twenty-two  and  twenty-six  years  of  age  could  acquire  only 
$2,000.  Those  who  began  between  twenty-seven  and  forty 
could  have  only  $1,000.  For  those  above  these  ages  and 
for  all  who  could  not  be  insured  the  firm  set  aside  $35  per 
year  until  $1,000  stood  to  their  credit;  or  if  they  died  before 
this  sum  was  credited,  the  heirs  received  the  amount  placed 
to  their  credit  on  the  books.  The  firm  also  agreed  to  pay 
pensions  for  the  aged  and  disabled,  varying  in  amount  from 
one-half  to  all  the  wages  during  the  preceding  year  before 
the  disability  began.  The  amount  of  the  pension  was  partly 
determined  by  the  period  of  service,  from  ten  to  twenty-five 
years,  but  it  might  not  in  any  case  exceed  $1,000.  Very 
few  remained  long  enough  in  the  service  to  gain  right  to  a 
pension.2 

Since  the  scheme  was  advertised  far  and  wide  Mr. 
Dolge  severed  his  connection  with  the  firm  and  started 
in  business  in  California.  From  thence  he  wrote  to  the 
writer  December  12,  1906,  to  the  effect  that  his  scheme  of 
insurance  which  he  had  conducted  for  twenty-five  years 
had  been  abandoned  by  his  successors.  He  also  called 

2  Article  of  E.  W.  Bemis  in  Handwoerterbuch  der  Staatswissen- 
schaften,  1898,  Bd.  I,  p.  714;  article  of  Paul  Monroe,  American  Journal  of 
Sociology,  January,  1897;  A.  Dolge,  Economic  Theories  as  Practically 
Applied  in  the  Factories,  1896. 


204  INDUSTRIAL  INSURANCE 

attention  to  the  fact  that  already  in  1895  he  had  shown  the 
inherent  weakness  of  all  such  individual  enterprises  un- 
supported by  law,  and  had  recommended  a  national  system 
of  industrial  insurance  so  that  workmen  in  moving  from 
one  state  to  another,  according  to  the  changing  demands  for 
labor,  might  not  be  deprived  of  the  advantages  of  insurance. 
He  declares  that  his  own  experience  had  deepened  this 
conviction  and  he  was  glad  to  learn  that  the  state  of  Illinois 
was  considering  a  law  for  the  promotion  of  this  object. 

The  benefit  association  of  the  Buffalo  Smelting  Works 
was  established  in  1893.  The  dues  of  the  married  members 
are  $i  and  of  the  unmarried  50  cents  monthly.  These  dues 
are  subtracted  from  the  wage  payments  and  used  only  for 
relief  in  case  of  disability.  The  contributions  of  the 
firm  are  expended  solely  on  death  benefits.  The  sickness 
benefits  are  $25  monthly,  after  five  days,  and  accident 
indemnity  is  the  same.  There  are  250  employees  and  mem- 
bership in  the  association  is  voluntary.  The  same  firm  has 
a  similar  organization  in  their  mines.  The  funds  are  in- 
vested in  the  stocks  of  the  company  and  the  interest  is  used 
to  pay  premiums.3 

The  New  York  Edison  Company  pays  the  wages  of 
injured  workmen,  during  disability,  about  $10,000  annually.4 

Steinway  &  Sons,  New  York,  have  had  in  their  estab- 
lishment a  benefit  association  since  1864,  and  in  1883  a  new 
association  was  formed,  which  has  a  membership  of  eight 
hundred  and  fifty.  The  firm  contributes  annually  to  the 
fund  $1,000,  pays  $1,200  for  three  beds  in  a  hospital,  and 
pays  for  medical  treatment.  Every  employee  who  is  over 
eighteen  years  of  age  must  become  a  member  of  the  associa- 
tion within  three  months  after  being  employed;  later  he 

8  Report,  New  York  Department  of  Labor,   1903,  p.  231. 
*Ibid.,  p.  283. 


FIRMS  AND  CORPORATIONS  205 

cannot  become  a  member.  The  entrance  fee  is  $1.00  and 
the  monthly  dues  1 5  cents.5 

The  Oneida  Community  has  an  association  and  all  em- 
ployees must  be  members.  The  weekly  dues  are  5  cents,  in 
some  cases  10  cents;  the  community  contributes  to  the  fund 
50  per  cent,  of  the  dues.  The  sickness  benefits  are  50  cents 
or  $i  daily,  during  thirteen  weeks,  and  afterward  half 
this  amount  for  thirteen  weeks.6 

Rochester  Railway  Co.  has  seven  hundred  employees,  of 
whom  four  hundred  and  fifty  are  members  of  the  benefit 
society.  Employees  between  twenty-one  and  fifty  years  of 
age  can  become  members  of  the  association  after  a  medical 
examination.  The  entrance  fee  is  $1.00;  monthly  dues, 
50  cents;  disability  benefit,  $1.00  per  day,  for  100  days  in 
one  year;  death  benefit,  Si5o.7 

Bausch »  &  Lomb  Optical  Company,  Rochester,  N.  Y. 
The  firm  gave  $3,000  as  a  foundation  for  the  fund.  All 
employees  between  twenty  and  forty-five  years  of  age,  after 
they  have  been  employed  by  the  firm  for  two  months,  may 
become  members  of  the  society.  The  monthly  dues  vary 
according  to  the  rate  of  wages  from  5  to  50  cents,  accord- 
ing as  the  wages  are  from  $3  to  $12  weekly;  the  death 
benefit  is  $15  to  $100;  the  sickness  benefit  from  $i  to 
$8  weekly.  The  pension  fund  has  reached  $20,000,  and 
out  of  the  interest  on  this  fund  the  firm  pays  to  superan- 
nuated employees  pensions  graded  in  amount  according  to 
former  wages  and  period  of  service.8 

The  International  Harvester  Company,  Chicago,  has  in 
preparation  an  insurance  plan  for  their  20,000  to  25,000 
employees  in  all  the  affiliated  branches  of  their  establish- 
ments.9 

6  Ibid.,  p.  291.  7  Ibid.,  p.  315. 

6  Ibid.,  p.  297.  *Ibid.,  p.  302. 

9  This   important  scheme   is   printed   in   full  in  Appendix  H. 


206 


INDUSTRIAL  INSURANCE 


The  Swift  Packing  Co.,  Chicago,  has  branches  in  Kansas 
City,  South  Omaha,  East  St.  Louis,  South  St.  Joseph,  South 

TABLE  II 
SWIFT    &    COMPANY    EMPLOYEES    BENEFIT   ASSOCIATION.     SCHEDULE   OF 

CONTRIBUTIONS  FOR  MEMBERS  UNDER  45  YEARS  OF  AGE 
M  embers  45  years  of  age  and  over  may  enter  on  this  schedule  if  they  have  been 
in  the  employ  of  Swift  &  Co.  continuously  from  December  31,  1906,  to 
date  of  entry,  and  avail  themselves  of  this  privilege  on  or  before  Decem- 
ber 31,  1907. 


| 

1 

IS 

3! 

IIS 

Weekly  Pay  of  Employees 
Governing  Highest  Class 
They  May  Enter 

"8 

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11 

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1 

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^cB 

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$0.15 

$  3-°° 

$  200.00 

$  400.00 

$  800.00 

2 

.  20 

3.00 

400  .  oo 

400.00 

800.00 

$13  .  50  and  under  .  . 

3 

•3° 

4-5° 

OOO.OO 

600.00 

1,200.00 

4 

•3° 

6.00 

400  .  oo 

400  .  oo 

800.00 

5 

.40 

6.00 

800.00 

800.00 

1,600.00 

Over  $13  .  50  and  not 

over  $18  oo  

6 

KQ 

Q.OO 

800  .  oo 

800  .  oo 

1,600.00 

Over  $18.00  and  not 

7 

over  $30  oo  

7 

.71; 

13.50 

1,200.00 

1,200.00 

2,400.00 

Over  $30  oo  

/ 
8 

/  O 
I.OO 

18.00 

1,600.00 

1,600.00 

3,200.00 

o> 

Additional  death  benefits  (as  allowed  by  rules),  5  c.  per  week  for  each 
$200.00. 

Members  who  have  left  the  service  and  contribute  for  death  benefit  only 
5  c.  per  week  for  each  $200.00. 

Weekly  accident  benefit  for  104  weeks  and  reasonable  bill  for  surgical 
attention. 

Weekly  sick  benefit,  after  the  first  6  working  days,  for  52  weeks  and  half- 
weekly  benefit  for  additional  52  weeks. 

SCHEDULE  OF  CONTRIBUTIONS  FOR  MEMBERS  45  YEARS  OF  AGE  AND  OVER 
AS  FOLLOWS: 

Members  joining  between  the  ages  of  45  and  50  years,  one  and  one-half 
times  above  contributions. 

Members  joining  between  the  ages  of  50  and  55  years,  one  and  four-fifths 
times  above  contributions. 

Members  joining  between  the  ages  of  55  and  60  years,  two  and  three- 
tenths  times  above  contributions. 


FIRMS  AND  CORPORATIONS  207 

St.  Paul  and  Fort  Worth,  with  about  400  warehouses  and 
offices  in  the  United  States.  For  their  25,000  employees 
(sometimes  more  and  sometimes  less)  this  firm  has  worked 
out  a  plan  of  benefits  which  has  many  liberal  features.  In 
August,  1908,  the  membership  was  over  11,500. 

The  rules  of  the  Swift  &  Co.  Employees  Benefit  Asso- 
ciation went  into  effect  July  I,  1907.  The  object  is  to 
provide  payments  of  definite  amounts  to  such  employees  as 
contribute  to  the  fund  in  case  of  disability  or  to  their 
relatives  in  the  event  of  death.  The  company  agrees  to  pay 
operating  expenses  and  to  make  good  deficiency  in  funds 
to  meet  obligations.  The  advisory  committee,  which  has 
general  supervision,  is  composed  of  seven  members  chosen 
by  the  company  and  seven  others  elected  by  the  members. 
The  company  pays  the  wages  and  expenses  of  travel  of 
members  of  the  committee.  Medical  examiners  prepare 
applications,  report  on  the  condition  of  sick  or  injured 
members,  decide  when  members  are  disabled  and  when  they 
are  ready  to  work,  and  certify  bills  for  surgical  treatment. 
Disability  is  defined  as  physical  inability  to  work  by  reason 
of  sickness  or  accidental  injury.  The  contributions  and 
benefits  are  shown  in  the  table.  Membership  is  voluntary 
and  no  provision  is  made  for  securing  a  release  from  legal 
liability. 

The  plan  of  the  United  Traction  and  Electric  Co., 
worked  out  with  the  aid  of  the  well-known  actuary,  Mr.  M. 
M.  Dawson,  has  the  highest  value  for  those  who  wish  to 
draw  up  articles  of  a  similar  kind.  The  report  of  the  asso- 
ciation for  1905  showed  receipts  of  the  fund  of  $30,226.97; 
of  which  the  employees  contributed  $14,942.40  and  the 
company  $12,831.12.  The  expenditures  for  death  benefits 
were  $9,875;  for  sick  benefits  $19,744.59.  Since  the 
organization  the  members  have  paid  in  $60,984.30  and  the 
company  $42,846.10.  The  costs  of  administration  are  met 


208  INDUSTRIAL  INSURANCE 

by  the  company  and  are  not  counted  in  reports  of  expendi- 
tures. 

The  object  of  the  association  is  to  afford  aid  and  relief 
to  sick  and  disabled  members,  and  to  the  widows  and 
children  of  deceased  members.  Membership  is  limited  to 
employees  of  the  company.  The  directors  are  persons 
appointed  by  the  company  and  others  elected  by  the  mem- 
bers by  ballot.  The  contributions  are  in  proportion  to 
wages:  10,  15,  or  20  cents  each  week;  the  members  being 
divided  into  three  wage  classes,  according  to  their  earnings. 
These  cover  those  earning  less  than  $9  per  week,  $9  to  $12 
per  week,  or  over  $12  per  week.  The  death  ^benefits  are 
$500,  $750,  or  $1,000,  according  to  class.  In  case  of  dis- 
ability the  weekly  benefits  are  $4,  $6,  or  $8.  Disability  is 
defined  "as  total  incapacity  to  carry  on  any  gainful  occupa- 
tion." There  is  a  provision  looking  to  payment  of  partial 
benefits  for  partial  disability.  The  company  agrees  to  pay 
(i)  one-fifth  of  each  death  benefit;  (2)  one- fourth  of  the 
amount  of  contributions  by  the  members,  payable  weekly; 
(3)  sums  to  cover  expenses  of  management,  adjustment, 
and  litigation  of  claims;  (4)  sums  to  cover  deficiencies,  to 
be  repaid  if  there  is  a  surplus.  The  release  clause  is 
significant :  "No  benefit  either  for  death  or  disability  shall 
be  payable  except  upon  a  receipt  which  shall  contain  a 
release  in  proper  form  ....  from  all  liability  to  the 
beneficiaries. 

The  Standard  Oil  Co.  "It  has  aimed  to  secure  the 
contentment  of  its  employees  by  liberal  and  considerate 
treatment  allied  with  a  pension  system,  assuring  a  compe- 
tency for  waning  years.  About  65,000  employees  are  or 
may  become  eligible  for  this  pension,  and  no  less  than 
500,000  men,  women,  and  children  are  directly  or  indirectly 
interested  in  the  preservation  of  the  company."10 

"Statement  of  Mr.  John  D.  Archbold,  vice-president  of  the  Standard 
Oil  Co.,  in  Saturday  Evening  Post,  December  7,  1907,  p.  32. 


FIRMS  AND  CORPORATIONS  209 

Mr.  Francis  H.  MacLean  has  recently  published  the 
results  of  a  study  of  insurance  schemes  in  New  York  City.11 

Self-insurance  against  accidents  by  larger  companies  is  not  an 

unknown  thing  in  New  York  City It  cannot  be  said  that  they 

have  been  introduced  into  many  companies.  Quite  a  numbef  of  com- 
panies do  provide  hospital  care.  A  smaller  group  have  combined  sick 
and  accident  benefit  systems  which  are  sometimes  wholly,  sometimes 
partly,  supported  by  the  companies  themselves 

The  American  Manufacturing  Co.,  with  factories  in  St.  Louis, 
Mo.,  and  in  New  York  City,  has  a  system  which  has  been  in  use  for 
many  years  and  was  introduced  by  the  vice-president  of  the  company. 
It  provides  for  half-time  wages  in  case  of  either  sickness  or  accident. 
It  includes,  of  course,  immediate  medical  attention.  In  case  of  per- 
manent disability  the  loss  of  wage-earning  power  is  estimated  and  a 
special  trust  fund  set  aside  from  which  the  sufferer  draws  the  income 
for  life.  The  Greenpoint  factory  of  this  company  is  the  largest 
factory  from  the  point  of  view  of  number  of  employees  in  New  York 
City.  The  number  runs  from  2,000  to  2,200,  of  whom  about  two- 
thirds  are  girls  and  women.  There  is  a  large  number  of  minor  acci- 
dents in  this  factory,  and  occasionally  a  serious  one.  The  cost  of  the 
insurance  system  runs  about  ij^  per  cent,  of  the  weekly  pay-roll. 
Insurance  in  a  liability  company  would  run  about  1  of  I  per  cent.  Of 
course  it  must  be  remembered  that  the  former  covers  sickness  which 
would  not  be  covered  by  the  liability  insurance.  The  vice-president 
was  asked  what,  viewed  solely  from  the  business  point  of  view,  was 
the  advantage  in  the  costlier  system.  He  answered  without  hesitation 
that  the  additional  cost  more  than  came  back  to  the  company  through 
increased  regularity  in  attendance. 

This  company  does  not  find  that  the  payments  of  insur- 
ance is  an  unbearable  burden  which  cripples  it  in  competi- 
tion with  companies  in  the  same  line  which  do  not  have  such 
insurance  schemes.  Apparently  the  payment  of  insurance, 
in  the  judgment  of  the  managers,  is  a  good  investment. 

In  the  same  magazine  (p.  1213)  is  a  description  of  the 
accident  insurance  scheme  of  the  New  York  Edison  Com- 
pany. Mr.  E.  M.  Atkin,  chief  of  the  claim  department,  says 

11  Charities  and  the  Commons,  December  7,   1907,  pp.  1207  ff. 


210  INDUSTRIAL  INSURANCE 

that  the  former  policy  of  insuring  with  employers*  liability 
companies  was  abandoned  as  unsatisfactory,  and,  since  May 
i,  1905,  the  Edison  Company  has  handled  the  problem  at 
first-hand.  Free  medical  care  is  given  in  case  of  injury  and 
the  workman  is  requested  to  sign  a  release  of  all  legal  claims. 
If  the  accident  is  due  to  negligence  of  the  company  or  any 
agent,  full  wages  are  paid  during  disability.  If  the  accident 
is  due  to  the  negligence  of  the  workman  he  may  receive  one- 
quarter  or  one-half  wages  during  disability.  In  case  of 
fatal  accident,  the  funeral  expenses  are  paid,  and  a  donation 
made  to  the  family.  The  company  has  had  about  3,000 
accidents  since  the  system  was  adopted  and  only  five  men 
have  sued  the  company.  The  costs  of  litigation  being  saved, 
the  money  is  available  for  benefits  to  the  injured  men  or 
their  families.  The  system  of  records  of  the  causes  of 
accidents  enables  the  company  to  apply  preventive  and  pro- 
tective measures  by  which  the  number  of  accidents  is 
reduced. 

The  illustrations  given  in  this  chapter  show  that  the 
business  world  in  the  United  States  is  not  in  sight  of  a 
consistent  social  policy  in  relation  to  industrial  insurance, 
that  employers  are  filled  with  vague  dissatisfaction  and  are 
making  what  they  call  "practical"  experiments,  the  most 
costly  and  unsatisfactory  of  all.  Gradually  the  influence  of 
actuaries  is  making  itself  felt  with  advantage,  but  they  have 
only  traditional  standards  to  guide  them.  Perhaps  the  form- 
ulation of  a  broad  and  well-adjusted  social  policy  will  grow 
out  of  the  labors  of  the  society  established  for  the  study  of 
labor  legislation;  and  the  attempts  of  Massachusetts,  New 
York,  Illinois,  Wisconsin,  and  other  states  to  introduce  some 
form  of  compensation  will  help  to  clarify  the  views  of  men 
and  formulate  their  ideas  of  what  is  fair  and  practicable. 
The  suggestions  of  a  state  commission  are  more  apt  to  be 
free  from  the  bias  of  narrow  interests  than  schemes  invented 


FIRMS  AND  CORPORATIONS  211 

simply  to  escape  legal  burdens  and  responsibilities  without 
giving  an  equivalent.  One  thing  seems  quite  certain;  the 
agitation,  discussion,  and  experimentation  of  the  past  few 
years  are  bearing  fruit  and  we  are  moving  more  rapidly 
than  in  any  previous  time  toward  a  sound  basis  of  agree- 
ment. 


CHAPTER  VIII 
INSURANCE  PLANS  OF  RAILWAY  CORPORATIONS 

Even  if  afterward  we  give  separate  treatment  to  special 
branches  of  the  insurance  of  railway  employees — accident, 
sickness,  death  benefits,  pensions,  and  superannuation — it 
seems  wise  at  first  to  treat  each  system  as  a  whole.  It  is 
difficult  to  separate  the  items,  and  the  companies  themselves 
bring  the  various  branches  under  a  common  scheme  and 
administration,  each  part  being  understood  only  as  it  is 
considered  in  relation  to  all  others.  It  is  in  this  way  that 
Riebenack  goes  to  work  in  presenting  the  results  of  his 
valuable  studies  to  which  in  this  chapter  we  are  so  deeply 
indebted,  although  independent  studies  have  been  made  with 
other  sources,  and  some  of  the  conclusions  reached  are 
different  from  his.1 

According  to  official  statements2  there  were  in  this  coun- 
try, on  June  30,  1902,  202,471.85  miles  of  railroads.  In 
1892  there  were  only  171,563.52  miles.  The  number  of 
"steam-railroad  employees"  reported  by  the  census  of  1900 
was  461,909  males,  149,230  females;  total,  611,139.  Riebe- 
nack gives  the  mileage  for  1903  as  205,000  and  the  em- 

1  See  Railway  Provident  Institutions  in  English-Speaking  Countries, 
by  M.  Riebenack,  comptroller  of  the  Pennsylvania  Railroad  Company 
(Philadelphia,  1905)  ;  pp.  31,  357,  and  index.  The  reports  used  by  Mr. 
Riebenack  are  for  the  year  1903.  Since  his  study  was  made  many 
changes  have  been  made  in  some  of  the  companies.  Materials  are  not 
easily  accessible  to  bring  details  up  to  date,  but  some  of  the  most 
important  recent  schemes  are  here  added. 

"Statistical  Abstract  of  the  United  States,  1903,  pp.  403,  495.  The 
Interstate  Commerce  Commission  reports  (July  9,  1908)  that  on  June 
30,  1907,  the  total  single-track  railway  mileage  in  the  United  States 
was  229,951.19  miles;  the  number  of  persons  on  pay-rolls,  1,672,074; 
wages  and  salaries,  $1,072,386,427. 

212 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     213 

ployees  as  1,312,537,  but  he  includes  persons  of  all  classes 
who  are  engaged  in  this  occupation.  His  own  study  covered 
railroads  with  a  mileage  of  73,35176  with  their  653,267 
employees.  This  means  35.8  per  cent,  of  total  mileage  and 
49.7  per  cent,  of  employees.  His  work  is  based  on  returns 
from  140  railroad  companies,  63  having  made  no  response 
to  requests  for  information.  The  volume  contains  much 
interesting  information  about  other  forms  of  "welfare 
work"  with  which  we  are  not  here  concerned. 

A  summarized  statement  of  the  results  of  this  important 
study  is  thus  given : 

The  nine  purely  relief  department  roads  hereinbefore  discussed 
represent  an  aggregate  of  31,000  miles  of  roadway,  or  about  15  per 
cent,  of  the  total  railway  mileage  of  the  United  States,  with  employees 
numbering  318,000,  or  about  24  per  cent,  of  the  total  number  of  rail- 
way employees  in  the  country,  and  an  insurance  membership  of 
206,000  employees,  or  practically  65  per  cent,  of  the  total  number  of 
employees  identified  with  the  service  of  the  roads  involved.  The 
combined  average  annual  disbursements  of  these  departments  aggre- 
gate about  2,230,000,  while  their  combined  disbursements,  since  organi- 
zation, approximate  $37,iso,ooo.3 

The  railroad  companies  in  the  United  States  have  made 
thus  far  the  most  important  contribution  to  the  promotion 
of  industrial  insurance.  They  are  under  the  control  of  men 
who  have  large  views  and  highest  ability.  Mr.  Bryce  says 
of  these  men :  "these  railroad  kings  are  among  the  greatest 
men,  perhaps  I  may  say  the  greatest  men  in  America."4  The 
long  life  of  these  corporations  is  also  favorable  to  large  and 
permanent  schemes  of  betterment,  and  if  we  add  the  enor- 
mous resources  of  the  companies  we  may  account  for  their 
leadership  in  this  field. 

Hospital  service. — This  is  the  most  primitive  form  of 
relief.  The  necessity  of  having  surgical  and  medical  help 

3  Riebenack,  op.  cit.,  p.  77. 

4  The  American  Common-wealth,  Vol.  II,  pp.  530-53,  2d  ed. 


214  INDUSTRIAL  INSURANCE 

at  hand  at  all  times  was  forced  upon  the  attention  of  rail- 
roads at  an  early  period.  The  first  hospital  department  was 
established  by  the  Southern  Pacific  Railroad  in  California 
in  1868,  though  before  that  time  companies  were  obliged 
by  circumstances  to  make  arrangements  for  emergencies 
with  physicians  and  private  hospitals.  Riebenack  received 
reports  from  35  railway  companies  with  hospital  organiza- 
tion, representing  an  aggregate  of  about  70,000  miles  and 
360,000  employees,  and  treating  annually  over  275,000 
cases.  Ten  of  these  companies  report  that  they  make  pay- 
ments for  this  service,  either  to  their  own  hospitals  or  to 
others  under  contracts,  out  of  purely  railway  revenue.  The 
cost  of  hospital  service  to  the  Pennsylvania  System  during 
the  year  ending  December  31,  1903,  was  $20,567.50.  The 
rates  paid  by  employees  are  from  25  cents  to  $1.00  per 
month.  The  company  usually  provides  hospital  buildings, 
free  transportation,  and  occasionally  supplies  "operative 
deficiencies."  The  medical  staff  is  organized  under  a  chief 
surgeon  or  physician,  with  division  and  local  surgeons  and 
physicians  distributed  at  convenient  points  along  the  lines 
or  road,  and  a  corps  of  hospital  surgeons.  Specialists  are 
employed  when  desirable.  Under  these  arrangements  the 
fees  paid  are  simply  for  medical  services;  in  case  of  injury 
the  damages  are  settled  by  agreement  or  litigation.  Oc- 
casionally the  members  of  families  of  members  are  received 
for  treatment  in  the  company  hospitals  at  reduced  rates. 
Some  attention  is  given  to  providing  first  aid  to  the  sick 
and  injured  by  lectures  from  medical  men  to  groups  of 
employees  and  by  placing  packets  of  bandages,  medicines, 
etc.,  at  convenient  points  ready  for  use. 

Insurance  in  private  companies. — After  hospital  service 
the  next  step  forward  toward  an  adequate  insurance  system 
has  been  taken  by  those  roads  which  secure  favorable  terms 
for  life  insurance  with  private  companies.  The  railway 


INSURANCE  PLANS  OF  RAILWAY  CORPORATIONS     215 

companies,  by  the  use  of  their  authority  as  employers  and 
by  directions  given  to  their  clerical  force,  are  able  to  save 
much  of  the  cost  of  solicitation  and  collection  of  premiums. 
They  are  thus  in  a  position  to  secure  better  terms  than  an 
individual  employee  could  do,  and  their  own  contribution  of 
collection,  sometimes  with  a  moderate  subsidy,  facilitates 
the  process  and  diminishes  the  burden  on  the  employees. 
Several  forms  of  this  experiment  may  be  cited. 

In  some  cases  the  company  merely  arranges  for  a  can- 
vass of  solicitation  by  agents  of  the  insurance  companies. 
The  Bangor  and  Aroostook  Railroad  Co.,  with  its  412 
miles,  and  1,320  employees,  is  in  this  group.  The  Illinois 
Central  Railroad  (4,301.10  miles,  34,249  employees)  secured 
favorable  rates  from  reliable  accident  insurance  companies. 
The  Norfolk  and  Western  Railroad  Co.  (1,722  miles,  15,- 
394  employees)  has  a  similar  plan.  The  employees  are 
classified  according  to  the  risk  to  which  they  are  exposed 
from  "select"  to  "special  hazardous."  The  ordinary  in- 
demnities are:  "$500  death  benefit  or  $2.50  weekly  indem- 
nity, as  a  minimum,  and  $1,000  death  benefit  or  $5  weekly 
allowance,  as  a  maximum.  Higher  amounts  may  be  insured 
in  less  hazardous  classes.  The  company  collects  the  prem- 
iums by  deduction  from  the  pay-roll.  On  February  i,  1904, 
3,865  out  of  a/total  of  15,394  employees  held  some  insur- 
ance. 

Similar  plans  are  those  of  the  Texas  and  Pacific  Railroad 
Co.  The  premiums  range  from  $10.20  to  $61.20  per 
annum;  weekly  indemnity,  $5  to  $25  per  week;  death 
benefit,  $500  to  $5,000,  The  railroad  deducts  premiums 
from  the  pay-roll  and  receives  commission  of  5  per  cent. 
Out  of  8,177  employees  only  1,250  are  insured.5  The  Cin- 
cinnati, New  Orleans  and  Texas  Pacific  Railway  Co.,  in 
addition  to  securing  death  benefits  and  accident  indemnity, 

0  Riebenack,  op.  cit.,  p.  24. 


2i6  INDUSTRIAL  INSURANCE 

also  has  sickness  insurance  covered  by  the  same  premium. 
Various  forms  of  policy  are  offered.  It  is  estimated  that 
the  private  company  is  saved  about  41  per  cent,  of  the  cost 
of  business,  since  it  has  no  expense  for  soliciting  and  collect- 
ing premiums;  and  hence  it  can  give  lower  rates.  The 
"health"  insurance  costs  $6.00  per  year  for  each  $5.00  of 
weekly  sick  benefit  applied  for.  At  the  close  of  1903  only 
517  employees  out  of  5,338  were  insured,  and  these  carried 
$780,100  for  death  benefits  and  $7,097  for  monthly  in- 
demnity. The  annual  receipts,  $12,633.48,  were  made  up 
of  $11,761.92  contributions  of  employees  and  $871.56  by 
the  company. 

In  some  cases  the  company  pays  a  part  of  the  premium. 
Thus  the  Chicago  and  Alton  Railroad  (915  miles;  7,339 
employees)  in  1899  made  a  contract  with  an  insurance 
company  for  a  life  and  accident  policy,  agreeing  to  pay 
one-half  the  premiums  for  the  hazardous  classes  and  30 
per  cent,  for  the  non-hazardous.  This  plan  seems  to  have 
been  abandoned  on  the  ground  that  the  insurance  company 
could  not  carry  the  risk  at  rates  agreed.  The  Union  Pacific 
Railroad  (2,933.7  miles,  15,338  employees)  on  January  i, 
1901,  agreed  to  pay  one-third  the  premiums  of  the  hazard- 
ous and  one-fourth  of  the  premiums  of  the  other  classes. 

We  find  a  different  type  of  insurance  where  the  railroad 
company  itself  conducts  an  accident-insurance  business  and 
in  addition  settles  on  an  equitable  basis  for  injuries  which 
might  fairly  be  supposed  to  involve  legal  liability.  The 
Chicago  and  Eastern  Illinois  Railroad,  in  June,  1893,  organ- 
ized a  scheme  for  issuing  policies  securing  benefit  in  case 
of  accident  or  death.  Persons  over  65  years  of  age  are 
debarred  from  participation,  unless  they  have  come  to  that 
age  in  the  service  of  the  company.  The  premiums  paid  are : 
for  office  men,  station  men,  passenger  conductors,  tower 
men,  and  flag  men,  one-half  of  i  per  cent,  of  wages;  freight- 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     217 

train  men  and  switchmen,  2  per  cent,  of  wages;  all  others, 
I  per  cent,  of  wages.  The  benefits  are:  for  disability  due 
to  accident,  one-half  of  usual  wages  not  exceeding  50 
weeks,  the  total  not  more  than  $1,000;  for  death  benefit, 
one-half  of  wages  of  one  year  with  funeral  expenses  and 
physician's  bill,  not  to  exceed  $100;  deductions  being  made 
for  previous  payments  on  indemnities,  the  total  not  to  ex- 
ceed $1000.  The  company  gives  free  surgical  attendance, 
makes  good  deficiencies  in  the  fund,  and  administers  the 
business,6  The  object  is  to  provide  sound  accident  insur-' 
ance  at  lowest  cost.  By  reason  of  their  employment,  the 
hazard  of  accident  resulting  in  personal  injury  is  so  great 
that  the  premiums  charged  by  the  ordinary  casualty  com- 
pany are  almost  prohibitive,  and  only  a  small  percentage  of 
the  higher-priced  railroad  men  can  afford  to  pay  these  rates. 
The  ordinary  accident  policy  is  "provided  with  so  much  red 
tape  and  contains  so  many  conditions  precedent  that  the 
collection  of  benefits  is  usually  the  result  of  some  kind  of 
compromise,  so  that  the  employee  is  practically  without  pro- 
tection, and  without  protection  he  usually  becomes  a  charge 
on  the  company,"  says  Mr.  H.  F.  Jones,  the  administrator 
of  the  plan.  At  first  the  plan  was  optional,  and  the  men 
could  accept  or  decline  membership.  So  many  of  the  em- 
ployees availed  themselves  of  the  opportunity  that  to  facili- 
tate the  handling  of  matters  pertaining  to  it,  it  was  made 
compulsory  in  May,  1895,  with  all  employees  except  those 
in  non-hazardous  branches  of  the  service.  The  premiums 
are  deducted  from  the  pay-roll  and  the  benefits  are  paid 
monthly  as  the  wages  are  paid.  The  experience  of  the  com- 
pany is  that  the  scheme  has  reduced  suits  by  employees  to 
a  minimum  and  given  to  the  employees  much  more  than 
they  would  have  been  paid  if  they  had  entered  suit.  By 
careful  attention  to  preventive  and  first-aid  devices  and 

6  Riebenack,  op.  cit.,  p.  20. 


218  INDUSTRIAL  INSURANCE 

prompt  medical  help  the  number  of  accidents  and  the  dura- 
tion of  disabilities  have  been  considerably  reduced.  Gratui- 
tous contributions  have  ceased.  After  the  first  shock  of 
the  hurt  abates  the  employee  who  is  injured  has  a  better 
feeling  toward  the  company  on  account  of  the  prompt  and 
substantial  indemnity  paid.  The  plan  is  advantageous  to 
all  parties  concerned. 

Philanthropic  endowments. — The  one  conspicuous  ex- 
ample of  this  type  is  the  Andrew  Carnegie  Fund.  On 
March  12,  1901,  Mr.  Carnegie  gave  to  the  Carnegie  Co., 
Pittsburgh,  Pa.,  $4,000,000  in  trust,  the  interest  to  be 
applied  in  providing  relief  for  employees  of  the  Carnegie 
Co.  in  all  its  works,  mines,  railways,  shops,  etc.,  and  for 
those  dependent  upon  employees  who  are  killed;  also 
to  provide  small  pensions  or  aid  to  such  employees  as,  after 
long  and  creditable  service,  need  help  in  their  old  age.  On 
December  31,  1903,  the  report  mentioned  284  cases  of  acci- 
dent, 1 68  deaths,  189  pensioners.  Total  disbursements, 
$228,866.02.  The  Bessemer  and  Lake  Erie  Railroad  Co. 
(207  miles,  2,676  employees)  comes  under  this  trust,  the 
"Andrew  Carnegie  Relief  Fund."  Employees  are  not  re- 
quired to  contribute  to  the  fund.  The  accident  benefits  are : 
75  cents  per  day  for  52  weeks  to  an  unmarried  man,  and 
one-half  this  rate  afterward.  Married  men  receive  $i 
per  day,  with  an  additional  benefit  of  10  cents  for  each  child 
under  16  years  of  age;  one-half  rates  after  52  weeks.  Death 
benefits:  maximum  payment,  $1,200.  Deficits  in  the  fund 
are  met  by  ratable  reductions  in  the  allowances.  Total 
disbursements  amount  to  $9,168.75;  accident  benefits  to 
$4,788.75;  death  benefits  to  $4,38o.7  Some  visitors  in 
the  region  where  the  fund  is  administered  have  the  con- 
viction that  the  fund  is  somewhat  abused  by  malingerers. 

Still  another  type  is  that  of  mutual  insurance  associa- 

7  Riebenack,  op.  cit.,  p.  30. 


INSURANCE   PLANS   OF  RAILWAY  CORPORATIONS     219 

tions  of  employees.  The  employees  of  the  Ann  Arbor  Rail- 
road Co.  (291.9  miles,  1,563  employees)  in  1899  formed 
an  association  for  mutual  insurance.  The  company  itself 
assumes  no  responsibility.  The  membership  in  1903  was 
850  (out  of  a  total  of  1,563).  The  premiums  are  graded 
according  to  the  hazard  of  occupation.  The  minimum 
premium  for  station  agents  and  clerks  is  25  cents  per  month, 
with  a  weekly  indemnity  of  $5  and  a  death  benefit  of  $1,000. 
The  maximum  premiums  and  allowances  are:  for  firemen 
and  engineers,  $1.62  per  month  assessments,  weekly  in- 
demnity $10,  death  benefit,  $2,000;  for  freight  brakemen 
and  switchmen,  $1.74  monthly  assessments,  $7  weekly  in- 
demnity, $700  death  benefit.  The  premiums  and  indem- 
nities of  the  sick  fund  are :  a  premium  of  35  cents  per  month 
gives  a  weekly  indemnity  of  $5 ;  50  cents  gives  a  weekly 
indemnity  of  $7.50;  70  cents  gives  $10.  A  funeral  benefit 
of  $100  in  case  of  death  from  causes  other  than  accident 
is  paid.  Premiums  are  deducted  from  the  monthly  pay-roll 
The  receipts  during  the  year  1903  were  $11,686.20. 

The  employees  of  the  Cincinnati,  Hamilton  and  Dayton 
Railroad  Co.  (1015.09  miles,  5,449  employees)  organized 
an  association  in  1876,  which  has  a  membership  of  1,610. 
There  are  two  classes  of  members :  those  who  pay  $i  assess- 
ment on  the  death  of  a  member  and  receive  a  death  benefit 
of  $500;  and  the  other  who  pay  $2  and  receive  $1,000. 
Accident  benefits  are  $5  per  week  in  case  of  injury  in  Class 
A,  while  in  Class  B  a  benefit  of  $1,000  is  paid  for  loss  of 
both  legs,  both  eyes,  both  arms,  or  one  leg  and  one  arm. 
The  average  annual  mortality  has  been  12.4  per  thousand. 

Regular  relief  departments. — These  organizations  rep- 
resent the  most  complete  methods  of  sickness  and  accident 
insurance  known  in  the  United  States.  The  old-age  and 
disability  pension  schemes  will  be  considered  separately. 
The  employees  of  the  Baltimore  and  Ohio  Railroad  Co.  took 


22O 


INDUSTRIAL  INSURANCE 


the  initiative  in  insurance  schemes  with  their  relief  organi- 
zation on  May  i,  1880.  This  was  practically  a  mutual 
insurance  association.  But  the  first  railroad  corporation 
to  organize  a  relief  department  of  its  own,  according  to 
Riebenack,  was  the  Pennsylvania  Co.,  on  February  15,  1886. 
The  Baltimore  and  Ohio'  Co.  established  its  relief  depart- 
ment April  i,  1889.  These  schemes  have  served  as  models 
for  others. 

We  take  the  Pennsylvania  Railway  Relief  Department 
as  a  typical  example  for  detailed  description,  and  it  will  not 

TABLE  i 


LINES  EAST 

LINES  WESI 

c 

CLASS 

Workmen 

Members 

Percentage 
of 
Members 

Workmen 

Members 

Percentage 
of 
Members 

Officials  etc     

24  OQ'? 

it  8^3 

66 

7  088 

44^6 

<;6 

Telegraphers  
Conductors  

2,702 
1  606 

1,878 

2  060 

70 
82 

1,340 
I  508 

985 
I  3Q4 

74 
Q2 

Brakemen  

O7UW 

17    OO7 

II  3^2 

87 

-3   213 

•?  Q27 

O4 

Engineers  

4,  4.8  2 

3  487 

78 

2  198 

2  062 

O4 

Firemen  

4,770 

4  38l 

02 

2  328 

2  260 

O7 

Switchmen  

4,180 

*wj 

3,6^7 

87 

•ztie 

3,018 

86 

Machinists  

27,642 

18,000 

60 

10x87 

8,804 

84 

Station  agents  

24,74^ 

13,301 

CA 

*w»3;:» 

7,^86 

I  008 

2C 

Irregular  workmen  . 

I,OOI 

679 

68 

Total 

IIO  3.27 

76  ^07 

60 

40  26"? 

27  084 

7O 

be  necessary  to  give  so  much  space  to  others  formed  on  the 
same  pattern  though  differing  in  some  particulars.  The 
Pennsylvania  system  east  and  west  of  Pittsburgh  has  10,- 
913.89  miles  and  172,024  employees;  east,  5,852.44  miles, 
117,928  employees;  west,  5,061.45  miles,  54,096  employees. 
Branch  lines  are  included  in  the  system.  From  the  year 
1874  the  employees  had  urged  the  management  to  consider 
the  subject,  but  only  in  1886  (February  15)  was  a  plan 
organized  under  the  title,  "The  Pennsylvania  Railroad  Vol- 
untary Relief  Department."  This  was  the  first  absolutely 


INSURANCE   PLANS   OF  RAILWAY  CORPORATIONS     221 


independent  relief  organization  in  the  United  States  for 
railroad  employees.  The  relief  department  for  lines  west 
of  Pittsburgh  was  established  July  i,  1889.  Both  plans  are 
on  essentially  the  same  basis  and  may  be  described  together. 
The  object  is  to  provide  definite  benefits  to  members  disabled 
by  accident  or  sickness,  or  to  their  dependent  relatives  in 
case  of  death.8 

The  contributions  of  the  company. — The  railroad  cor- 
poration guarantees  the  fulfilment  of  the  obligations  as- 
sumed, takes  charge  of  funds,  is  responsible  for  their  safe 
keeping,  supplies  facilities,  and  pays  expenses  of  adminis- 
tration (including  salaries  of  officers,  medical  examiners, 
clerical  force),  pays  interest  on  monthly  balances,  and 

TABLE  II 


„     Class 

Lines  East 
Monthly  Earnings 

Lines  West 
Monthly  Earnings 

Monthly  Payments 

,    I  
II.. 

Less  than  $35 

$"?  ?  to  S^  ? 

Not  over  $40 
$40  to  $60 

$0.75 
I    c;o 

Ill  
IV.. 

SP^i    L(J  MP^O 

55  to    75 

7  e  to     Q  C 

60  to    80 
80  to  100 

2.25 
300 

V.. 

Qt  upwards 

Over  $100 

•z  7C 

approves  securities  of  investments.  The  company  admin- 
isters by  a  superintendent  with  assistants.  The  general 
supervision  is  vested  in  an  advisory  committee,  seven  of 
whose  members  are  elected  by  members. 

Membership. — All  classes  of  employees  are  eligible.  The 
maximum  age  for  entrance  to  the  service  of  the  company 
is  35  years,  except  where  professional  qualifications  are 
required.  The  employee  forwards  his  application  for  mem- 
bership to  the  relief  department  and,  after  medical  exam- 
ination, signs  a  form  of  contract.  Any  employee  under  45 
years  of  age  may  become  a  member  if  he  passes  a  satis- 
factory medical  examination.  The  total  membership  on 

8  Riebenack,  op.  cit.,  pp.  60-72. 


222 


INDUSTRIAL  INSURANCE 


December  31,  1903,  was  104,151,  out  of  172,024  employees. 
Table  I  shows  the  membership  by  classes. 

Membership  payments  are  fixed  and  uniform  without 
reference  to  occupation,  and  differences  are  based  on  wage 
classification,  as  will  be  seen  in  Table  II. 

An  employee  is  permitted  to  change  from  one  class  to 
another  within  certain  defined  limits. 

The  company  occasionally,  in  meritorious  cases,  extends 
the  relief  beyond  52  weeks  out  of  its  own  funds  as  a  gratu- 
ity. Funeral  expenses  are  paid  out  of  death  benefits.  The 

TABLE  III 
SHOWING  BENEFITS  ACCORDING  TO  CLASSES 


ist  Class 

ad  Class 

3d  Class 

4th  Class 

5th  Class 

Accident  — 
Daily  indemnity  up  to  52 
weeks          

$O.  CO 

$1  .  OO 

$1    CO 

$2    OO 

$2    CO 

After  52  weeks  

O.  2C 

O.  CO 

O   7C 

I    OO 

I    2C 

Sickness  — 
Up  to  52  weeks,  after  3  days 
After  5  2  weeks  

0.40 
O.  2O 

0.8o 
o.  40 

I.  2O 

o.  60 

1.  60 

0.80 

2.OO 
I    OO 

Death  benefit  

$2CO 

$coo 

$7  Co 

$1,000 

$1,250 

average  annual  mortality  rate  per  thousand  members  has 
been  12.6  (east)  and  12  (west). 

The  income  of  the  relief  fund  is  from  these  sources : 
membership  contributions;  company  appropriations,  when 
necessary,  to  make  up  triennial  operative  deficits;  income 
and  profit  arising  from  investment  of  money  on  hand ;  gifts 
and  legacies;  free  use  of  buildings,  transportation,  and 
other  facilities  supplied  by  the  company  for  conducting  the 
department  business;  relief  from  all  operating  expenses 
which  are  borne  by  the  company.  In  the  event  of  a  surplus, 
at  the  end  of  any  three-year  period  of  operation,  after  allow- 
ing for  liability  incurred  and  not  paid,  such  surplus  is 
devoted  exclusively  to  promote  a  fund  for  the  benefit  of 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     223 

superannuated  members,  or  in  some  other  manner  for  the 
sole  benefit  of  members  of  the  relief  fund. 

The  total  receipts  since  the  establishment  of  the  depart- 
ment have  been  $19,950,940.94,  made  up  as  follows: 

LINES  EAST  OF  PITTSBURGH 

From  membership    $11,672,717.39 

From  the  Company  2,544,348.1 1 

From  other  sources    422,027.04 


Total  receipts  east  of  Pittsburgh   $14,639,092.54 

LINES  WEST  OF  PITTSBURGH 

From  membership    $  4,342,321.95 

From  the  Company   $      969,526.45 


Total  receipts  west  of  Pittsburgh   $  5,311,848.40 

Aggregate  receipts  of  Pennsylvania  System. .  .$19,950,940.94 

The  average  receipts  per  annum  for  lines  east  of  Pitts- 
burgh, $813,282.91;  and  for  lines  west  of  Pittsburgh, 
$404,554.73,  or  a  total  each  year  of  $1,217,837.64. 

The  total  disbursements  since  the  establishment  of  these 
funds  have  been : 

LINES  EAST  OF  PITTSBURGH 

For  accident   $  2,246,454.10 

For   sickness    4,455,618.80 

For  death   4,851,434.88 

For  operating  expenses   1,815,641.54 

For  superannuation  allowances    148,662.15 


Total     $13,517,811.47 

LINES  WEST  OF  PITTSBURGH 

For   accident    $  1,162,281.65 

For   sickness    1,473,124.60 

For  death   1,687,241.22 

For  operating  expenses   754,607.81 


Total     $  5,077,255.28 

Total  disbursements  of  entire  system $18,595,066.75 


224  INDUSTRIAL  INSURANCE 

The  average  disbursements  per  year,  for  lines  east  of 
Pittsburgh,  have  been  $750,989.53,  and  for  lines  west  of 
Pittsburgh  $381,260.40,  or  an  aggregate  of  $1,132,249.93 
for  the  entire  system. 

The  advantages  claimed  for  the  relief  department  over 
the  older  conditions  are :  Indemnity  is  provided  in  case  of 
disablement  from  accident  or  sickness  and  death  from 
accident  or  natural  causes,  at  minimum  cost.  The  cost  of 
insurance  in  regular  companies  is  ordinarily  prohibitive 
for  those  in  hazardous  branches  of  railroad  employment. 
Free  surgical  attendance  is  furnished  in  case  of  injury 
received  during  the  performance  of  work  for  the  company, 
and  artificial  limbs  are  supplied  and  other  similar  articles 
needed  by  injured  persons.  There  is  no  fee  for  entrance 
nor  for  medical  examination,  nor  any  special  dues,  taxes,  or 
assessments.  The  member  is  exempt  from  paying  dues 
during  disablement  except  for  the  month  in  which  the  injury 
occurred.  There  is  no  danger  of  forfeiting  insurance  from 
non-payment  of  dues,  since  these  are  collected  from  the 
pay-roll  so  long  as  the  member  is  at  work.  All  expenses  of 
administration  are  paid  by  the  company,  so  that  contribu- 
tions are  devoted  entirely  to  payment  of  benefits.  Death 
benefits  cannot  be  taken  for  debt,  payments  being  made  only 
to  designated  beneficiaries.  Neither  employees  nor  employ- 
ers are  troubled  by  subscription  solicitors  for  disabled  men, 
as  was  the  case  before  this  plan  went  into  effect. 

A  surplus  fund  from  the  relief  department  east  of  Pitts- 
burgh accumulated  since  1886  amounted  to  $751,256.25, 
the  interest  on  which  is  devoted  to  superannuation 
allowances.  From  this  fund  1,408  retired  members  have 
received  $148,672.23;  the  expenditures  in  1903  were  $43,- 
875.12.  On  lines  west  of  Pittsburgh  no  surplus  has  been 
accumulated,  and  so  no  superannuation  payments  have  been 
made.  Of  pension  schemes  mention  will  be  made  later. 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     225 


The  Baltimore  and  Ohio  Railroad  system. — This  com- 
pany, with  its  4,410  miles  of  way  and  55,688  employees, 
was  one  of  the  first  to  organize  insurance  for  its  employees. 
An  association  was  formed  May  i,  1880,  and  the  com- 
pany itself  established  a  relief  department  March  15, 
1889.  Out  of  20,606  members  of  the  old  association 
19,467  joined  the  new  department.  The  company  annually 
gives  $6,000  to  the  relief  fund,  or,  when  it  is  not  needed 
there,  to  the  pension  fund.  It  contributes  $10,000  annually 
for  medical  examinations;  provides  office  room  and  furni- 
ture; gives  the  services  of  officers  in  administration;  is 

TABLE  IV 


MONTHLY  DUES 

DAILY  BENEFITS 

DEATH  BENEFITS 

WAGE  CLASS 

Accidents 

Sickness 

i  Div. 

2  Div. 

26  Wks. 

After 

Sickness 

Accident 

Ordinary 

Max. 

A,  up  to  $35  ... 

$I.OO 

$0.75 

$0.50 

$0.25 

$0.50 

$    5°° 

$     250 

$1,250 

B,  $35  to  $50.  .  . 

2.OO 

1.50 

I.OO 

0.50 

I.OO 

1,000 

500 

1,250 

C,  $50  to  $75... 

3.00 

2.25 

1.50 

o-7S 

1.50 

1,500 

75° 

1,250 

D,  $75  to  $100 

4.OO 

3.00 

2.00 

I.OO 

2.00 

2,000 

1,000 

1,250 

E,  over  $100.  .  . 

5.00 

3-75 

2.50 

1.25 

2.50 

2,500 

1,250 

1,250 

responsible  custodian  of  the  funds;  and  guarantees  pay- 
ments of  rates  promised.  The  company  endeavors  to  pro- 
vide partially  disabled  employees  with  occupation  suited  to 
their  abilities.  This  company  has  three  forms  of  benefits — 
relief,  pensions,  and  savings  schemes;  here  we  consider 
only  the  first.  While  the  administration  is  conducted  by 
the  company  there  is  an  advisory  committee  on  which  the 
employees  are  represented.  Members  are  classified  accord- 
ing to  wages. 

The  benefits  for  disablement  are  not  paid  for  Sundays 
and  holidays.  The  higher  rates  for  accidents  are  paid 
during  the  first  26  weeks  and  then  the  lower  during  the 
subsequent  disability.  Sickness  benefits  are  paid  after  the 


226  INDUSTRIAL  INSURANCE 

first  week  for  52  weeks.  The  death  benefits  where  death  is 
due  to  sickness  are  ordinary  and  maximum  as  shown  in 
the  table. 

Employees  not  exposed  to  special  risks  of  accidents  may 
insure  for  natural  death  benefits  only,  or  for  both  natural 
death  and  sick  benefits  at  25  cents  per  month,  which  is  also 
the  cost  of  additional  natural  death  benefits.  The  modes  of 
payment  are  made  quite  flexible,  to  be  adapted  to  various 
incomes  and  hazards.  Membership  is  said  to  be  voluntary 
though  preference  is  given  in  the  retention  of  employees  to 
those  who  belong  to  the  relief  department.  No  person 
over  45  years  of  age  is  admitted  to  membership  without 
approval  of  the  president  of  the  company. 

The  total  receipts  since  the  establishment  of  the  plan 
have  been  $9,520,628.80;  of  which  membership  payments 
furnished  $8,730,415.40,  the  company  paid  $344,590.75, 
and  other  sources  $445,622.65.  The  average  receipts  per 
year  have  been  $410,962.38.  The  receipts  for  the  year  end- 
ing June  30,  1903,  were  $775,646.43 ;  from  members,  $712,- 
595.82;  from  company  for  operating  expenses,  $10,000; 
reserve  fund,  $6,000;  interest,  $35,115.04;  bonds  redeemed, 
$10,000;  miscellaneous,  $1,935.57.  Total  disbursements 
since  the  beginning,  $8,691,061.88;  for  accident  benefits, 
$1,468,259.96;  sickness,  $2,257,336.38;  death,  $3,781,304.- 
95;  operating  expenses,  $931,373.04;  other  $252,787.55; 
average  disbursement  per  annum,  $375,153.75.  Disburse- 
ments for  the  year  ending  June  30,  1903,  were  $732,102.97; 
for  death'  benefits,  $178,500  (accidents) ;  death  benefits 
(natural  causes),  $152,090;  disablement  from  accident 
$129,362.60;  disablement,  sickness,  $178,867.38;  surgical 
expenses,  $14,909.81;  refunded  to  members,  $12,274.68; 
advances,  $2,564.80;  operating  expenses,  $68,076.18.  The 
total  membership,  June  30,  1903,  was  41,783,  or  about  90 
per  cent,  of  the  entire  working  force  of  the  company.  The 


INSURANCE  PLANS  OF  RAILWAY  CORPORATIONS     227 

total  membership  is  divided  between  hazardous  and  non- 
hazardous  occupations;  the  former  include  28.75  Per  cent- 
and  the  latter  71.25  per  cent.  The  surplus  funds  at  the  close 
of  each  fiscal  year  are  used  either  to  reduce  the  next  year's 
contributions,  or  to  increase  the  amount  payable  for  natural 
death  or  to  increase  pensions.9 

The  Cleveland  Terminal  and  Valley  Railroad  Co.  (88.- 
38  miles,  i,  088  employees)  has  a  department  closely  akin  to 
the  Baltimore  and  Ohio  Relief  Department.  The  total 
receipts  from  membership  dues  during  1903  were  $17,- 
148.65.  Total  disbursements  during  1903  were  $9,304.42  ; 
for  accidental  deaths,  $2,000;  for  natural  deaths,  $500; 
disablement  from  accident,  $3,126.67;  disablement  from 
natural  causes,  $3,094.95  ;  surgical  expenses  $582.80.  The 
number  of  members  was  995  (399  in  hazardous  class  and 
596  in  non-hazardous  class). 

The  Philadelphia  and  Reading  Railway  Co.  established 
its  relief  association  October  30,  1888.  The  contributions 
and  benefits  are  the  same  as  those  of  the  Pennsylvania  Sys- 
tem. An  additional  $100  is  paid  with  each  death  benefit  out 
of  the  surplus  fund  without  regard  to  class.  The  yearly 
surplus  is  used  for  the  superannuation  fund  or  in  some  other 
way  for  the  benefit  of  the  members.  The  maximum  age  for 
admission  to  membership  is  45  years.  Benefits  are  not  paid 
longer  than  52  weeks,  but  the  claim  to  death  benefit  does  not 
cease  with  that  period.  The  employee  loses  his  rights  when 
he  ceases  to  be  an  employee,  except  that  if  he  has  been  a 
member  3  years  he  may  retain  rights  in  the  death  benefit. 
The  company  contributes  5  per  cent,  of  the  amount  paid  by 
employees  and  makes  good  deficiencies  in  funds  if  there  are 
any.  The  total  receipts  since  establishment  of  the  fund 
have  been  $4,049,494.11;  from  members,  $3,362,678.05; 
from  company,  $443,831.68;  other  sources,  $242,984.38; 

9  Riebenack,  op.  cit.,  p.  46. 


228  INDUSTRIAL  INSURANCE 

average  receipts  per  year,  $269,966.28;  receipts  for  the  year 
ending  November  30,  1903,  $299,940.11.  The  total  dis- 
bursements since  the  beginning  have  been  $3,596,729.96; 
for  accidents,  $880,574.66;  sickness,  $895,794.16;  death, 
$1,436,708.05;  operating  expenses,  $375>O77-25;  other,  $8,- 
575.84;  average  annual  disbursements,  $241,765.54.  Dis- 
bursements for  the  year  ending  November  30,  1903,  were 
$292,423.41;  for  death  benefits,  accidents,  $46,250;  death, 
natural  causes,  $64,550;  accidental  death,  from  surplus 
fund,  $10,200;  death  from  natural  causes,  from  sur- 
plus fund,  $15,100;  death  benefits  to  former  employees, 
$3,500.  The  total  death  benefits  were  $139,600.  Dis- 
ablement benefits  were  for  accidents,  $65,152.50;  natural 
causes,  $70,016.30;  surplus  fund,  $316.20  (accidents); 
surplus  fund  (natural  causes),  $651.90;  total  $136,136.90. 
Salaries  and  expenses  of  medical  examiners  were  $16,- 
186.51.  The  expenses  of  operating  the  association  during 
1903  were  $33,658.40,  of  which  the  company  paid  $17,- 
471.89  and  the  relief  fund  paid  $16,186.51.  The  company 
also  contributed  $12,955.02  to  the  fund — $30,466.91  in  all. 
The  average  annual  mortality  per  1,000  members  was  12.1. 
The  membership  on  November  30,  1903,  was  18,951,  or  80 
per  cent,  of  employees. 

The  Atlantic  Coast  Line  Railroad  (4,138.87  miles, 
17,512  employees)  established  its  relief  association  April  i, 
1899;  but  this  company  already  had  a  relief  and  hospital 
department  under  the  previous  title  of  the  corporation,  the 
Plant  System.  The  rates  of  contributions  and  benefits  are 
so  near  those  of  the  Pennsylvania  System  that  they  need  not 
be  repeated.  In  1903  there  were  8,129  members,  about  62. 
per  cent,  of  the  working  force.  The  membership  was  dis- 
tributed according  to  grades:  general  office  and  station 
employees,  23  per  cent. ;  trainmen,  yardmen,  telegraphers, 
23  per  cent. ;  enginemen  and  firemen,  12  per  cent. ;  machine 


INSURANCE  PLANS   OF  RAILWAY  CORPORATIONS     229 

and  car-shop  employees,  25  per  cent.;  track  department 
employees,  17  per  cent.  Members  of  the  family  of  an 
insured  employee  are  permitted  to  enter  a  company  hospital 
for  needed  treatment  at  reduced  rates.  The  release  clause 
is  very  explicit : 

Acceptance  by  the  member  of  benefits  for  injury  operates  as  a 
release  and  satisfaction  of  all  claims  against  the  company  for  dam- 
ages arising  from  or  growing  out  of  such  injury.  If  any  suit  is 
brought  against  the  company  for  damages  all  obligations  of  the  Relief 
Department  will  be  forfeited.  If  a  claim  for  damages  is  settled  with- 
out suit  or  by  compromise,  such  settlement  will  release  the  Relief 
Department  and  the  company  from  all  claim. 

The  Chicago,  Burlington  and  Quincy  Railroad  Co. 
(8,324  miles,  38,350  employees).  The  relief  department 
was  established  March  15,  1889,  and  went  into  operation 
June  i  of  the  same  year.  The  basis  of  contributions  and 
benefits  is  similar  to  that  of  the  Pennsylvania  system.  Ar- 
rangements are  made  for  commutation  of  benefits  in  case  of 
grave  injury  on  payment  of  a  lump  sum,  the  injured  man 
being  required  to  sign  away  his  right  to  bring  suit  under  the 
employers'  liability  law.  The  sums  paid  range  from  $800 
to  $3,200  for  loss  of  hand  or  foot  above  the  wrist  or  ankle, 
or  twice  these  amounts  in  case  of  loss  of  both  hands  or  both 
feet,  or  of  one  hand  and  one  foot.  Membership  may  be  con- 
tinued after  leaving  the  service,  in  case  of  three  years'  of 
previous  service  and  one  year  of  membership  in  the  depart- 
ment. The  maximum  age  of  admission  is  45  years.  The 
rate  of  mortality  is  stated  to  be  8.7  per  1,000  per  annum. 
The  receipts  of  the  fund  from  the  establishment  of  the  plan 
to  December  31,  1903,  were:  $4,368,215.69,  of  which  the 
employees  paid  $4,197,912.42,  the  company  $42,532.94  for 
deficiencies,  and  $127,770.33  came  from  other  sources.  The 
average  annual  receipts  have  been  from  all  sources,  $337,- 
489.90.  The  total  disbursements  since  the  beginning 


230  INDUSTRIAL  INSURANCE 

$4,592,579.36;  for  accident  benefits,  $1,432,372.94;  sick- 
ness, $1,127,247;  death,  $1,167,019.50;  operating  expenses, 
paid  by  the  company,  $865,939.92;  the  average  disburse- 
ments per  annum,  $332,504.71.  The  company  is  custodian 
of  the  funds  and  advances  money  to  meet  obligations.  Sur- 
plus funds  are  invested  in  securities.  The  membership  on 
December  31,  1903,  was  22,141,  about  58  per  cent,  of  the 
working  force.  Of  the  engineers  95.97  per  cent,  were 
members;  of  firemen,  96.56  per  cent.;  of  conductors,  90.09 
per  cent. ;  of  brakemen,  96.82  per  cent. ;  of  switchmen,  96.39 
per  cent. ;  of  trainmen,  enginemen,  and  yardmen  as  a  group, 
95-59  Per  cent-  ;  °f  all  others  48.87  per  cent. 

The  objections  of  many  of  the  employees  of  this  road 
to  the  feature  of  the  scheme  requiring  an  injured  man  to 
sign  away  his  rights  to  sue  the  company  under  the  liability 
law  in  order  to  enjoy  benefits  from  the  fund  which  was 
created  chiefly  by  the  contributions  of  the  workmen  have 
grown  more  strong  with  time  and  led  to  the  introduction 
into  the  legislature  of  Illinois  of  a  bill  to  make  such  use  of 
the  relief  fund  illegal  :10 

Providing  that  in  all  actions  hereafter  brought  against  any  employer 
to  recover  damages  for  personal  injuries  to  an  employee  or  where 
such  injuries  have  resulted  in  his  death,  no  contract  of  employment, 
insurance,  relief  benefit,  pension,  or  indemnity  for  injury  or  death 
entered  into  or  on  behalf  of  any  employee,  nor  the  acceptance  of  any 
such  insurance,  relief  benefit,  pension,  or  indemnity  by  the  person 
entitled  thereto,  shall  constitute  any  bar  or  defense  to  any  action 
brought  to  recover  damages  for  personal  injuries  to  or  death  of  such 
employee,  and  providing  that  upon  the  trial  of  such  action  against 
such  employer  the  defendant  may  set  off  therein  any  sum  such 
employer  has  contributed  toward  any  such  insurance,  relief  benefit, 
pension,  or  indemnity  that  may  have  been  paid  to  the  injured 
employee,  or,  in  case  of  his  death,  to  his  personal  representative. 

The  lower  house  adopted  this  bill  by  a  very  large  major- 
ity vote  on  February  28,  1907. 

10  45th  Assembly,  House  Bill  16,  February,   1907. 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     231 

The  Lehigh  Valley  Railroad  Co.  (1,398  miles,  18,621 
employees),  established  a  relief  department  January,  1878, 
to  provide  indemnity  for  accidents,  but  without  sickness 
insurance.  There  is  no  medical  examination  for  admission, 
nor  age  conditions.  Officers  of  the  company  administer  the 
plan,  and  the  company  pays  the  costs  of  management.  The 
fund  is  replenished  by  assessments  levied  at  intervals  of  four 
or  five  months  and  not  to  exceed  $3  in  any  case.  The 
company  pays  an  amount  equal  to  the  sum  of  the  contribu- 
tions of  the  employees.  Benefits  are  paid  on  the  basis  of 
the  contributions  to  the  credit  of  each  member  at  the  time 
of  injury.  Employees  receive  accident  benefits,  at  the  rate 
of  three-fourths  of  the  amount  of  contributions  for  the  call 
during  which  injury  occurred,  for  every  week  day,  exclusive 
of  holidays,  for  a  maximum  period  of  9  months,  if  disability 
continues  so  long.  A  burial  benefit  of  $50  is  paid,  and  the 
family  of  the  deceased  employee  receives  an  allowance  for 
every  working  day,  at  the  rate  of  three-fourths  of  the 
amount  of  his  contributions  for  2  years.  The  cost  of  surgi- 
cal and  medical  care  is  deducted  from  this  payment.  Arti- 
ficial limbs  are  paid  for  out  of  this  fund.  Contributions  are 
not  refunded  whether  the  employee  is  dismissed  or  leaves 
the  service  voluntarily.  The  total  receipts  from  the  begin- 
ning to  1903  were  $938,796.52,  of  which  the  company  paid 
one-half.  The  average  annual  receipts  were  $36,107.56; 
total  disbursements  during  the  period,  $924,236.35 ;  average 
for  each  year,  $35.547-55-  Membership  in  1903  was  6,505, 
about  35  per  cent,  of  the  entire  working  force:  employees 
in  train  service,  enginemen,  firemen,  .conductors,  brakemen, 
80.9  per  cent. ;  maintenance-of-way,  31.3  per  cent. ;  mainten- 
ance of  equipment,  32.1  per  cent.  It  may  be  noted  here 
that  this  company  accepts  the  principle  of  paying  half  the 
cost  of  accident  insurance  in  addition  to  paying  expenses  of 
administration  of  the  fund. 


232  INDUSTRIAL  INSURANCE 

The  Long  Island  Railroad  Co.  (391.76  miles,  5,415 
employees),  organized  its  department  January  i,  1886. 
The  fund  is  administered  by  the  president  of  the  company 
and  eight  others,  of  whom  five  are  elected  by  the  employees 
and  three  are  appointed  by  the  president.  The  company 
pays  the  salary  of  the  secretary,  interest  on  funds,  and  fur- 
nishes office  room.  The  membership  dues  are  based  on 
salaries  and  deducted  from  the  pay-roll. 

Members  in  Class  I,  with  a  salary  of  $60  and  over  per 
month  pay  $i  monthly  dues  and  receive  weekly  benefits  of 
$9;  the  death  benefit  in  this  class  is  $400.  In  Class  II, 
wages  $40  to  $60,  dues  are  75  cents,  benefits  $6.75,  and 
death  benefit  $300.  In  Class  III,  the  wages  are  $40  and 
less,  the  dues  50  cents,  the  weekly  benefit  $4.50,  and  death 
benefit  $200.  Benefits  begin  on  the  eighth  day  and  continue 
six  months.  The  total  receipts  since  the  establishment  of  the 
fund  have  been  $382,395;  the  average  per  year,  $21,- 
244.17.  Receipts  for  the  year  ending  January  31,  1904, 
were  $58,884.32;  total  disbursements,  $367,233;  average 
per  year,  $20,401.83.  Payments  during  the  year  ending 
January  31,  1904,  were  $42,186.86:  disablement  from  acci- 
dents, $10,373.34;  natural  causes,  $15,011.37;  death  benefits, 
accidents,  $7,300,  natural  causes,  $9,300.  Stationery  and 
printing  cost  $202.15.  The  membership  was  4,700,  about 
87  per  cent,  of  the  total  working  force.  The  annual  rate  of 
mortality  per  1,000  was  14. 

The  purely  relief  department  roads  hereinbefore  discussed  repre- 
sent an  aggregate  of  31,000  miles  of  roadway,  or  about  15  per  cent, 
of  the  total  railway  mileage  of  the  United  States,  with  employees 
numbering  318,000,  or  about"  24  per  cent,  of  the  total  number  of  rail- 
way employees  in  the  country,  and  an  insurance  membership  of 
206,000  employees,  or  practically  65  per  cent,  of  the  total  number  of 
employees  identified  with  the  service  of  the  roads  involved;  and  this 
membership  percentage  would  be  largely  increased  were  the  computa- 
tions based  on  the  exclusion  of  non-membership  employees,  who  are  so 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     233 


because  of  ineligibility  for  membership,  owing  to  age  or  physical  dis- 
qualifications. The  combined  average  annual  disbursements  of  these 
departments  aggregate  about  $2,230,000  while  their  combined  disburse- 
ments since  organization  aproximate  $37,1 50,000." 

Pension  schemes  of  railroads. — The  first  railway  cor- 
poration to  establish  a  pension  fund  was  the  Baltimore  and 
Ohio  (October  i,  1884).  The  present  standard  of  pension 
funds  was  established  about  the  year  1900.  The  following 
table  presents  the  essential  facts.12 

TABLE  v 


RETIREM 

ENT  AGE 

Voluntary 

Involuntary 

Group  A 

126  700 

61-60 

6"?-7O* 

3C—  AC 

Group  B  .   . 

"^j/yy 
46,378 

under  65 

65 

4"> 

Group  C  

2,676 

under  60 

60 

Group  D             .... 

4,4^4 

60—64 

6s 

•2C—  4C 

Group  E  

II,  Qtr-z 

6<—  60 

70 

•7t—  41; 

Group  F  

228,040 

6<—  60 

70 

•2C 

Group  G  

•2-j,-?O7 

60—60 

70 

•JC 

*  70  sedentary,  65  active. 

In  Group  A  were  the  following  roads:  Atlantic  Coast 
Line ;  Houston  and  Texas  Central ;  Illinois  Central ;  Oregon 
Railroad  and  Navigation  Co. ;  Oregon  Short  Line ;  San 
Antonio  and  Aransas  Pass ;  Southern  Pacific ;  Union  Pacific. 
In  Group  B :  Baltimore  and  Ohio.  In  Group  C :  Bessemer 
and  Lake  Erie  (in  connection  with  Andrew  Carnegie  En- 
dowment Fund),  Group  D:  Buffalo,  Rochester  and  Pitts- 
burgh. Group  E:  Central  of  New  Jersey.  Group  F: 
Chicago  and  Northwestern;  Pennsylvania  System,  east  and 
west;  Philadelphia  and  Reading.  Group  G:  Delaware, 
Lackawanna  and  Western.  The  Atchison,  Topeka  and 
Santa  Fe  road  established  its  system  in  1906. 

There  were,  in  the  year  1903,  16  such  organizations  in 

11  Riebenack,  op.  cit.,  p.  77. 
15 'Ibid.,  p.  9,  addenda. 


234 


INDUSTRIAL  INSURANCE 

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INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     235 

operation  and  2  in  preparation.  The  roads  having  such 
departments  had  more  than  50,000  miles  of  railway,  or 
about  24  per  cent,  of  the  total  railway  mileage  of  the  coun- 
try, and  about  500,000  employees,  38  per  cent,  of  the  work- 
ing force.  The  annual  appropriations  were  not  over 
$1,350,000.  Eight  of  the  roads  had  set  aside  a  fund  of 
about  $600,000.  Twelve  of  the  roads  had  expended,  up  to 
the  end  of  1903,  $2,500,000,  and  the  companies  had  on  their 
rolls  3,200  pensioners.  In  the  United  States  the  bene- 
ficiaries make  no  contributions  to  the  funds;  the  corpora- 
tions meet  the  entire  expense.  The  income  is  derived  from 
the  interest  on  a  definite  sum  which  is  made  the  basis  of  the 
plan,  and  additional  appropriations  are  made  as  required. 
In  some  cases  the  company  simply  assumes  responsibility 
for  a  maximum  annual  disbursement. 

The  objects  of  the  departments  are  uniformly  to  provide  for  com- 
pulsory retirement  from  service  at  65  or  70  years  of  age,  with  any- 
where from  ten  to  thirty  years'  continuous  service,  on  a  fixed  pension 
allowance,  computed,  usually,  at  I  per  cent,  of  the  average  monthly 
pay  for  the  ten  years  next  preceding  retirement,  for  each  year  of  ser- 
vice. Involuntary  or  compulsory  retirement  takes  place  between  ages 
65  and  70,  and  voluntary  retirement,  growing  out  of  incapacitation, 
between  ages  of  61  and  69  years.13 

The  plans  devised  by  the  Baltimore  and  Ohio  and  by  the 
Pennsylvania  companies  are  models  for  the  others.  In  the 
American  schemes  all  employees  are  included  without  regard 
to  grades  and  classes. 

The  Massachusetts  Labor  Bulletin,  January,  1907,  pre- 
sents a  table  (Table  VI)  which  shows  the  results  of  the 
various  railway  pension  systems  so  far  as  known  from 
reports  then  published.  . 

•  In  the  typical  system  the  pension  is  optional  with  the 
road  and  no  definite  sum  is  promised.  Mr.  Riebenack 
interprets  the  policy  in  this  language: 

13  Ibid.,  p.  9,  addenda. 


236  INDUSTRIAL  INSURANCE 

It  stands  for  an  annual  allowance  of  money  ....  without  an 
equivalent  in  labor  or  otherwise — generally,  however,  in  consideration 
of  past  services.  The  pension  allowance  is  purely  an  optional  railway 
disbursement  from  railway  revenue  exclusively,  the  employee  making 
no  contribution  whatever  to  the  scheme,  which  is  absolutely  subject  to 
company  direction  and  control. 

Control  is  exercised  either  through  an  autonomous  de- 
partment or  directly  by  officers  of  the  company.  Being  not 
a  legal  contract  but  a  gratuity,  it  has  only  such  assurance 
of  permanence  as  comes  from  the  will  of  the  corporation. 
It  does  not  seem  probable,  however,  that  the  corporations 
will  recede  from  their  plans,  because  these  are  so  advanta- 
geous to  the  company;  but  there  is  no  legal  obligation  to 
continue.  No  definite  amount  is  promised  and  usually  pro- 
vision is  made  for  ratable  reductions  in  pensions  when  the 
income  does  not  cover  the  expenses.  Allowances  are  as  a 
rule  based  on  age  and  service.  Lump  sums  are  not  paid 
in  settlement  of  claim,  and  allowances  cease  at  death  of  the 
pensioner.  The  aggregate  mortality  of  pensioners  since  the 
establishment  of  the  schemes  up  to  the  end  of  1903  was 
1,150. 

Since  the  system  adopted  by  the  Atchison,  Topeka  and 
Santa  Fe  R.  R.  Co.  is  one  of  the  most  recent  developments 
of  the  pension  idea  it  is  herewith  presented  in  some  detail. 

Of  the  motives  and  advantages  of  this  scheme  Mr. 
George  E.  Tunell,  secretary  of  the  Board  of  Pensions,  says : 

The   pension   system   will    relieve  the   strain   and   stress    of   life's 

struggle  before,  as  well  as  after,  retirement While  the  pension 

allowances  in  themselves  will  not  be  large  enough  to  enable  anyone 
to  live  in  the  manner  of  life  maintained  before  retirement,  they  will 
be  a  substantial  help,  especially  to  those  who  have  received  small 
wages.  It  was  not  designed  that  the  pension  system  should  remove 
the  necessity  for  saving.  It  was  expected  that  it  would  act  as  another 
inducement  to  thrift  and  industry,  and  that,  by  giving  new  hope  of  an 
independent  old  age  free  from  want,  an  additional  incentive  would  be 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     237 

given  to  work  and  save.  To  be  near  a  goal  that  is  worth  while  should 
make  all  eager  to  reach  it. 

The  pension  system  the  company  has  devised  is  the  most  liberal  in 
existence,  and  it  marks  a  big  advance  over  all  others  now  in  force.  It 
may  be  of  interest  to  point  out  a  few  of  the  features  in  which  our 
system  departs  from  those  of  all  other  railroads. 

On  the  Santa  Fe  no  additional  restrictions  are  placed  on  the 
employment  of  new  men,  and  no  employee  will  be  arbitrarily  retired 
simply  because  of  having  reached  the  age  of  sixty-five,  or  seventy 
years,  as  the  case  may  be.  Employees  will  be  retained  in  the  service 
as  long  as  they  are  able  to  perform  their  duties  satisfactorily,  or  some 
new  duty  that  is  less  arduous  and  exacting.  Retirement  will  be  for 
incapacity  alone,  the  Board  of  Pensions  deciding  when  a  man  is  too 
old  to  remain  in  the  service. 

The  Santa  Fe  plan  also  differs  from  all  others  because  it  dis- 
tinguishes between  the  men  who  have  received  small  salaries  and  those 
who  have  enjoyed  large  salaries.  It  discriminates  between  those  whose 
opportunities  to  lay  something  by  have  been  limited  and  those  who 
could  put  something  aside  for  a  rainy  day  and  yet  have  many  of  the 
comforts  of  life.  To  all  whose  salaries  have  been  moderate  our 
system  is  more  generous  than  any  other;  first,  because  it  gives  the 
pensioner  of  small  salary  a  larger  percentage  of  his  whole  salary  for 
each  year  of  service;  and,  second,  if  this  does  not  amount  to  at  least 
$20  a  month,  it  is  raised  to  $20,  this  being  the  smallest  pension  the 
company  will  give  any  pensioner.  An  illustration  will  show  how  much 
more  generous  our  system  is.  Under  the  system  in  force  on  any 
other  railroad  a  man  who  had  worked  for  twenty  years  at  a  salary  of 
$50  a  month  would  receive  a  pension  of  $10  a  month,  while  under 
our  system  he  would  receive  $20  a  month.  On  the  Santa  Fe  there 
will  be  neither  very  small  nor  very  large  pensions,  because  of  the 
minimum  and  maximum  provisions  of  our  system.  Under  all  other 
systems  there  is  no  limit  either  to  the  smallness  or  the  bigness  of 
pension  allowances.  No  other  system  draws  a  line  between  those 
having  good  opportunities  to  save  and  invest  and  those  who  have  not 
had  such  opportunities. 

Our  system  is  also  unique  in  recognizing  exceptionally  long  and 
efficient  service.  The  Board  of  Pensions  has  power  to  increase  the 
ordinary  allowances  by  25  per  cent,  for  unusual  merit. 

The  amount  of  pension  any  person  may  be  granted  by  the  Board 
of  Pensions  will  depend  on  three  conditions:  (i)  The  amount  of 


238  INDUSTRIAL  INSURANCE 

highest  average  monthly  pay  received  during  any  consecutive  ten  years 
of  service;  (2)  the  number  of  years  in  the  service  of  the  company  or 
of  its  auxiliary  companies,  and  (3)  the  character  of  the  service  taken 
in  connection  with  the  length  of  the  service. 

The  lowest  pension  is  $20  and  the  highest  $75  a  month. 
No  pension  is  allowed  to  any  officer  or  employee  who  shall 
make  or  enforce  any  claim  against  the  company  for  damages 
by  reason  of  any  injury  or  accident  occurring  within  three 
years  prior  to  the  date  when  such  employee  shall  be  retired 
or  leave  the  service.  A  person  who  leaves  the  service  for 
two  months  loses  his  claims  and  must  enter  as  a  new 
employee.  No  person  who  becomes  an  employee  after  the 
age  of  fifty  is  entitled  to  a  pension.  The  rate  of  pension 
is  reckoned  by  counting  for  each  year  of  service  an  allow- 
ance of  ij4  per  cent,  of  the  first  fifty  dollars  of  the  highest 
average  monthly  pay  of  the  officer  or  employee  during  any 
consecutive  ten  years  of  service,  and,  in  addition,  J4  of  i 
per  cent,  of  any  excess  of  such  highest  average  monthly 
pay  over  fifty  dollars ;  but  no  pension  must  be  less  than  $20 
nor  over  $75  a  month.14 

14  Since  the  Grand  Trunk  Railway  has  important  business  in  the 
United  States  its  recent  scheme  of  pensions,  which  went  Into  effect  Janu- 
ary i,  1908,  deserves  mention  here.  For  many  years  the  Grand  Trunk 
Railway  Insurance  and  Provident  Society  has  furnished  sickness  and 
accident  insurance  and  a  death  benefit.  The  new  old-age  pension  plan  has 
many  excellent  features.  Officers  and  employees  are  to  be  compulsorily 
retired  on  reaching  the  age  of  65  years,  except  by  special  action.  A  dis- 
abled employee  may  be  retired  at  60  years  after  20  years  of  service ;  and 
any  employee,  after  a  service  of  10  years  may  be  eligible  for  a  pension 
during  disability.  The  rate  of  pensions  is  fixed  by  taking  i  per  cent,  for 
each  year  of  continuous  service  on  the  highest  average  rate  of  pay  during 
any  ten  consecutive  years  of  service.  Thus  an  employee  in  continuous 
service  from  the  age  of  30  years  to  70  with  the  highest  average  rate  of 
wages  between  40  and  50  of  $1,000  per  annum,  would  receive  forty 
one-hundredths  of  $1,000  or  $400  per  annum.  No  pension  is  to  be 
lower  than  $200  per  annum.  No  employee  who  sues  the  company  for 
damages  on  account  of  personal  injuries  sustained  by  him  in  the  course  of 


INSURANCE   PLANS   OF  RAILWAY  CORPORATIONS     239 
CRITICISM   OF  RAILWAY   RELIEF   FUNDS 

The  fairest  starting-point  for  a  criticism  of  the  railway 
schemes  of  industrial  insurance  is  the  recollection  of  the 
condition  of  affairs  in  railway  occupations  before  these 
plans  were  introduced,  and  a  survey  of  the  general  neglect 
of  this  obligation  by  other  employers  at  this  time  in  the 
United  States.  Judged  in  this  way  the  managers  of  the 
great  transportation  corporations  deserve  credit  for  their 
humanity,  foresight,  and  energy  in  establishing  and  admin- 
istering these  funds.  They  represent  an  enormous  advance 
upon  anything  hitherto  known  in  this  country,  and  they 
point  the  way  to  further  progress.  Their  example  is  already 
stimulating  other  employers  to  think  and  act  in  the  same 
direction.  Their  carefully  kept  records  furnish  a  fund  of 
statistics  of  experiences  which  will  aid  in  improving  future 
schemes.  If  at  certain  points  we  compare  these  pioneer 
methods  with  those  more  advanced  in  Europe,  and  especially 
in  Germany,  it  is  only  because  progress  is  desirable  and 
comes  partly  by  comparison;  and  because  it  would  be  fatal 
to  settle  down  into  national  self -congratulation  and  stagna- 
tion when  the  fact  is  that  we  are  only  in  the  infancy  of  the 
movement.  That  the  railway  companies  have  found  it 
economically  possible  and  even  profitable  to  go  so  far  is  a 
complete  refutation  of  the  oft-repeated  assertion  that,  be- 
yond paying  market  wages  nothing  further  can  be  done;  and 
the  humanitarian  reasons  already  given  by  the  managers 
of  these  funds  puts  to  silence  the  claim  that  social  care  of 
wage-earners  is  no  part  of  the  duty  of  employers.  A  breach 
is  already  made  in  the  Chinese  wall  of  the  antiquated  "eco- 
nomic-man" theory;  an  opening  is  already  happily  made  for 
still  larger  applications  of  the  same  principles.  Our  criti- 

his  service  will  have  any  claim  for  pension.  No  legal  right  to  hold  a 
position  or  to  receive  a  pension  is  given  by  this  plan.  The  pension  fund 
is  administered  by  a  pension  committee. 


240  INDUSTRIAL  INSURANCE 

cisms  are  designed  to  show  in  what  directions  the  movement 
will  logically  and  naturally  carry  us. 

Motives  of  the  companies. — As  the  managers  of -these 
companies  must  report  to  the  stockholders  they  have  thus 
far  aimed  to  show  that  the  expenditures  on  insurance  made 
by  them  were  justified  on  the  ground  that  they  increased  the 
efficiency  of  the  employees  and  so  tended  to  produce  higher 
dividends  on  investments.  But  there  is  also  recognition  of 
social  obligation  of  capitalists  who  are  in  places  of  power. 

The  railroads  began  and  are  still  moving  on  the  principle  that 
there  is  indissoluble  mutuality  of  interest  between  employer  and 
employee  ....  These  provisions,  so  evidently  actuated  by  truly 
humane  purpose,  have  inevitably  resulted  in  improved  mental,  moral, 
and  physical  conditions,  thus  developing  a  reciprocal  feeling  between 
capital  and  labor,  and  at  the  same  time  energy  has  been  vitalized  and 
ambition  stimulated  among  the  rank  and  file  of  railway  employees.15 

As  will  be  shown,  these  desirable  results  have  been 
achieved  chiefly  at  the  cost  of  the  employees;  the  aid  of  the 
companies  being  valuable  but  financially  subordinate  in  case 
of  sickness,  accident,  and  death  benefits.  In  case  of  old-age 
pensions,  however,  the  burden  is  carried  entirely  by  the  com- 
panies. But  from  any  point  of  view  the  employees  have 
great  advantages.  They  are  interested  in  the  administra- 
tion of  the  relief  departments;  they  are  directly  represented 
by  their  elected  representatives  on  the  advisory  committees ; 
the  department  serves  as  a  friendly  bond  between  workmen 
and  employers;  misery  and  sorrow  are  mitigated;  the 
health  and  force  of  the  workmen  are  improved,  and  labor 
becomes  thereby  more  productive  and  remunerative.  Ordi- 
narily the  employee  when  injured  prefers  to  accept  the  cer- 
tain and  considerable  indemnity  offered  in  ready  cash  by  his 
fund  to  the  uncertain  outcome  of  a  costly  legal  process 
which  will  make  him  lose  his  occupation  when  restored  to 

"Riebenack,  op.  cit.,  p.  8;  see  also  address  of  J.  C.  Bartlett,  in  1897, 
before  the  St.  Louis  Railway  Club. 


INSURANCE  PLANS   OF  RAILWAY  CORPORATIONS     241 

health  or  his  pension  in  old  age.  The  manly  virtues  are 
fostered,  since  the  workman  no  longer  is  obliged  to  accept 
charitable  relief  as  in  former  days.  An  unsystematic,  un- 
organized, and  unequal  charitable  relief  is  displaced  by  a 
purely  economical  method,  in  which  the  burdens  are  equit- 
ably distributed  over  many,  and  the  advantages  may  be  taken 
without  loss  of  self-respect.  After  a  long  illness  the  em- 
ployee does  not  return  to  work  discouraged  and  enfeebled 
by  a  load  of  debt,  with  his  savings  dissipated  by  expenses. 
That  part  of  his  earnings  which  might  in  many  cases  have 
gone  for  drink  or  other  useless  consumption  under  this 
system  goes  to  purchase  insurance  against  a  time  of  need, 
The  provision  for  immediate  medical  and  surgical  aid  helps 
to  prevent  much  illness,  and  men  are  not  driven  to  return 
to  work  before  it  is  safe,  since  they  and  their  families  have 
means  to  meet  the  more  urgent  needs  of  existence.  At  first 
the  administrators  and  clerks  were  unwilling  to  accept  the 
burden  of  caring  for  the  fund,  because  it  demanded  many 
new  duties  and  extra  work;  but  gradually  the  manifest 
advantages  won  their  approval. 

Security  of  funds  and  payments  of  indemnities. — There 
seems  to  be  no  ground  for  doubt  that  the  funds  are  secure 
and  that  the  promises  of  the  relief  department  will  be  met. 
The  companies  guarantee  the  financial  obligations  and  have 
a  plan  which  provides  for  payments  as  they  are  required  by 
the  contracts.16  The  significance  of  this  fact  cannot  be  too 
strongly  emphasized.  It  means  that  only  under  expert 
management  and  in  connection  with  very  large  associations 
of  men  is  social  insurance  real  "assurance."  The  honesty 
and  efficiency  of  administration  are  here  guaranteed  as  sub- 
stantially as  they  can  be  made  under  private  management; 
and  the  publicity  of  accounts  is  further  security  for  sound 
business  management.  Much  of  the  subjective  value  of 

"Riebenack,  op.  cit.,  p.  32;  Willoughby,  op.  cit.,  pp.  310,  315. 


242  INDUSTRIAL  INSURANCE 

insurance  to  workingmen  lies  in  the  certainty  that  what 
they  pay  out  will  sacredly  be  kept  for  the  purpose  for  which 
they  have  made  sacrifices  and  parted  with  their  hard-earned 
money. 

Adaptation. — The  division  of  the  members  into  five 
classes  is  a  suitable  means  for  its  purpose  which  is  to  make 
the  expenses  and  benefits  of  insurance  proportionate  to  the  abilities 
and  needs  of  the  different  classes  of  employees.  Further  elasticity  has 
been  secured  by  the  provision  in  the  constitutions  of  practically  all  the 
departments,  that  members  may,  if  physically  sound,  be  assigned  to  a 
higher  class  than  that  to  which  the  amount  of  their  wages  would 
entitle  them,  and  by  the  opportunity  offered  them  to  take  out  additional 
death  benefit  insurance." 

Adequacy. — The  indemnities,  as  already  shown  in  the 
tables,  for  disablement  for  accident  and  sickness,  and  the 
death  benefits  from  both  causes  are  sufficient  to  meet  moder- 
ate demands. 

Equity  of  the  burdens. — In  the  description  already  given 
the  distribution  of  cost  of  insurance  for  sickness,  accident, 
death,  old-age,  and  incapacity,  the  division  and  placing  of 
the  burden  have  been  stated.  In  one  respect  the  railway 
corporations  seem  to  have  the  most  liberal  plan  yet  offered — 
they  pay  the  entire  cost  of  old-age  pensions.  The  only 
short-coming  here  lies  in  the  guarantee  of  specific  amounts ; 
"ratable  reductions"  in  the  payments  of  pensions  are  pro- 
vided for.  The  legal  basis  of  the  system  is  not  absolutely 
reassuring,  since  all  rests  on  the  good- will  of  the  company, 
and  no  contract  or  legal  obligation  exists.  In  a  country  with 
a  completely  developed  system  of  insurance  the  provision 
for  invalidism  and  old-age  is  placed  on  the  solid  founda- 
tion of  a  specific  legal  obligation  and  funds  are  provided, 
under  public  control,  to  meet  the  obligation.  There  is  little 
probability,  however,  of  the  abandonment  of  these  schemes 
by  any  railway  corporation. 

17  Willoughby,  op.  cit.,  p.  310. 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     243 

Why  do  the  companies  prefer  to  assume  the  entire  cost 
of  the  invalidism  and  old-age  pensions  ?  The  usual  answer 
is  that  if  the  employees  pay  part  of  the  premiums  they  must 
be  admitted  to  share  in  the  administration,  and  this  might 
complicate  relations  with  the  trade-unions.  Perhaps  there 
are  other  reasons.  Perhaps  the  companies  wish  to  use  the 
pension  scheme  to  prevent  litigation  in  case  of  accidental 
injuries.  Perhaps  the  companies  are  not  ready  to  make 
contracts  absolutely  binding  them  to  provide  pensions 
in  the  future.  During  the  time  of  experiment  the  man- 
agement must  feel  its  way  along  and  modify  measures 
according  to  experience.  It  is  not  necessary  to  keep  a  very 
large  fund  on  hand  for  accident  or  sickness  insurance;  the 
income  covers  the  expenditures  each  year  or  within  a  rela- 
tively short  period;  but  in  the  case  of  pensions  one  must 
reckon  with  long  periods  for  which  large  funds  must  be 
held  in  reserve. 

The  accident  insurance  is  closely  connected  with  sickness 
and  life  insurance,  and  this  fact  somewhat  complicates  the 
situation,  especially  as  the  employing  company  is  legally 
liable  for  disability  only  where  it  is  due  to  the  negligence  of 
the  employer.  In  criticism  of  the  schemes  under  review  we 
must  keep  in  mind  the  employers'  liability  law  elsewhere 
discussed.  It  could  hardly  be  expected  that  a  private  com- 
pany would  move  very  far  in  advance  of  the  requirements 
of  law.  Indeed  it  may  be  said  to  the  credit  of  the  companies 
that  they  have  voluntarily  organized  and  substantially  aided 
the  departments  of  accident  insurance  without  direct  legal 
compulsion.  At  a  time  when  the  narrow  legal  provisions 
of  the  employers'  liability  law  were  generally  regarded  as 
substantially  equitable,  when  it  was  supposed  that  each  em- 
ployee individually  assumed  the  ordinary  risks  of  a  hazard- 
ous occupation  in  the  act  of  accepting  employment  and  was 
expected  to  provide  for  himself  out  of  wages  and  savings, 


244  INDUSTRIAL  INSURANCE 

it  was  an  almost  revolutionary  step  for  an  employing  cor- 
poration to  admit  that  this  ethical  and  legal  rule  was  not 
satisfactory,  and  to  make  at  least  partial  provision  for 
indemnities  by  associated  action  with  the  workmen  and  by 
making  considerable  contributions  to  the  funds.  But  as  the 
community  comes  to  discover  and  accept  the  principle  of 
"professional  risk,"  that  a  business  which  does  not  make 
good,  as  far  as  indemnity  in  money  can  do  it,  the  losses  of 
human  energy  as  well  as  of  broken  and  worn  out  machinery, 
is  parasitic  and  socially  bankrupt,  the  schemes  of  the  rail- 
road companies  will  no  longer  satisfy  the  reason  and  con- 
science of  men.  According  to  the  new  ethical  principle 
which  has  practically  won  acceptance  in  Europe,  the  em- 
ployers should  pay  all  the  cost  of  accident  insurance,  and 
the  question  of  liability  for  negligence  should  not  be 
considered  except  where  there  is  manifest  criminal  action. 
But  these  railway  schemes  compel  the  men  to  pay  much  the 
larger  part  of  the  premiums  out  of  their  wages;  and  then 
they  are  liable  to  lose  their  claim  upon  the  fund  if  they 
claim  their  legal  rights  under  existing  liability  laws.  Indeed 
it  was  chiefly  to  escape  from  the  annoyance  and  cost  of 
damage  suits  that  the  scheme  was  founded.  There  are 
antagonistic  opinions  on  this  point,  and  in  fairness  both 
must  be  stated. 

Mr.  Riebenack  states  the  side  of  the  corporations  thus : 

The  applicant  for  fund  membership  enters  into  an  agreement  with 
the  fund  to  accept,  in  the  event  of  sustaining  disablement  by  injury 
while  in  the  service,  and  in  the  performance  of  service  duties,  the 
accident  benefits  specifically  prescribed  in  fund  regulations.  This  is  a 
distinct  agreement,  with  a  good  and  valid  consideration,  made  between 
proper  contracting  parties,  and,  therefore,  invested  with  due  legal 

status This   manner   of    fund  agreement   does   not   deprive   the 

member  from  instituting  legal  proceedings  instead  of  taking  the  rate 
of  compensation  offered  by  the  fund.  It  does  provide,  however,  that 
when  the  member  disregards  his  plain  obligations  under  its  terms,  he 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     245 

thereupon  forfeits  his  rights  to  fund  benefits,  and  the  question  of 
company  compensation  will  then  depend  wholly  upon  the  merits  of  the 
case  from  a  purely  legal  standpoint.18 

The  same  opinion  is  defended  by  E.  R.  Johnson,  in  Rail- 
way Departments  for  the  Relief  and  Insurance  of  Em- 
ployees, 2d  ed.,  March,  1900,  p.  99;  and  by  J.  C.  Bartlett,  in 
Railway  Relief  Departments,  1897. 

Willoughby  represents  another  point  of  view  :19 

Even  the  little  contribution  that  they  (the  corporations)  do  make 
is  more  than  offset  by  the  fact  that  the  companies  have  used  these 
departments  to  protect  themselves  against  suits  for  damages  on  the 
part  of  their  employees.  The  regulations  of  all  the  departments 
stipulate  that  members,  or  their  beneficiaries,  must  elect,  whether  they 
will  sue  the  companies  for  damages  on  account  of  the  injures  they 
have  received,  or  accept  the  benefits  of  the  relief  fund.  If  they  choose 
the  former,  they  thereby  forfeit  all  claim  to  the  latter,  and  the  accept- 
ance of  the  latter  acts  as  a  renunciation  of  all  legal  claims  they  may 
have  against  the  companies.  The  departments  are  largely  supported 
by  the  members  themselves,  and  the  receipt  of  benefits  in  return  should 
in  no  way  abridge  their  legal  rights.  The  provision  that  the  benefits, 
as  far  as  they  are  paid  from  contributions  made  by  the  roads,  should 
be  considered  as  a  part  payment  of  any  damages  that  might  be 
recovered  against  the  company  might  possibly  be  defended,  but  that 
the  act  of  bringing  suit  should  work  a  forfeiture  of  acquired  rights  is 
thoroughly  immoral  and  contrary  to  public  policy.  The  men  have 
made  payments  for  a  particular  purpose.  That  to  cancel  their  rights 
is  an  injustice,  it  would  seem  must  be  beyond  question. 

The  objections  of  the  employees  are  gathering  force  for 
an  attack  on  these  schemes  on  grounds  similar  to  those  urged 
by  Willoughby.  Thus  Mr.  E.  E.  Clark,  former  representa- 
tive of  the  Order  of  Railway  Conductors,  has  said: 

The  employees  of  the  companies  which  conduct  such  departments 
in  speaking  when  they  are  not  afraid  to  speak  plainly  generally  express 
the  conviction  that  in  so  far  as  an  employee  who  is  a  member  of  the 
department  is  concerned,  he  feels  that  if  he  should  withdraw  from  it 

"Riebenack,  op.  cit.}  p.  33. 

18  Workingmen's  Insurance,  p.  316. 


246  INDUSTRIAL  INSURANCE 

he  would  incur  the  displeasure  of  his  employers,  and  that,  when  the 
opportunity  is  offered,  a  fellow  employee  who  retained  membership 
in  the  department  would  be  given  a  preference  over  him,  and  that  so 
far  as  applicants  for  employment  are  concerned,  the  man  who  is  not 
ready  and  willing  to  join  the  relief  department,  is  not  needed  and  does 
not  secure  employment. 

The  applicant  for  membership  in  a  relief  department  is  required  to 
execute  a  contract  that,  in  the  event  of  his  being  injured  in  the  per- 
formance of  his  duties  and  of  his  accepting  the  benefits  provided  in 
the  department  for  such  cases,  he  thereby  releases  the  employing  cor- 
poration from  all  liability  under  the  statutory  or  common  law.  This 
means  that  if  a  member  of  the  department  is  injured  through  neglect 
of  the  company  or  of  its  agents  and,  believing  that  no  permanent 
disability  is  to  ensue,  he  accepts  the  first  month's  benefits  provided  by 
the  relief  department  and  tendered  by  the  company  and,  later,  finds 
that  he  is  disabled  for  life  or  his  death  ensues,  all  efforts  to  recover 
damages  from  the  company  are  forestalled  by  the  company  pleading 
the  contract  which  the  employee  signed  when  becoming  a  member  of 
the  relief  department.20 

Mr.  Clark  admits  that  the  contract  is  legally  valid  under 
the  common  law,  but  claims  that  it  is  unjust  and  cites  the 
Iowa  law  forbidding  the  making  of  such  contracts  as  the 
right  method  of  correcting  the  evil.  The  bill  introduced  by 
employees  of  the  Chicago,  Burlington  and  Quincy  road  in 
the  Illinois  legislature  of  1907  shows  that  this  revolt  is 
general  and  before  long  will  be  successful.  The  relief 
departments  must  be  fair  and  not  take  advantage  of  the 
employees  in  their  economic  need  of  employment  to  force 
upon  them  an  inequitable  contract  under  the  pretense  that 
they  are  free  to  accept  or  reject  it.  It  is  evident  that  this 
dispute  would  cease  if  the  principle  of  the  British  compensa- 
tion law  or  some  insurance  law  requiring  the  employers  to 
pay  at  least  half  the  premiums  and  all  expenses  were  to  be 
introduced. 

The  necessity  for  accident  insurance  is  made  plain  by  the 

20  National  Civic  Federation  Review,  March,   1905. 


INSURANCE   PLANS  OF  RAILWAY  CORPORATIONS     247 

statistics  of  casualties  in  the  railway  service.  Only  in  this 
occupation  have  we  approximately  accurate  records,  and 
this  because  the  federal  law  applied  through  the  Interstate 
Commerce  Commission  makes  reports  of  accidents  obli- 
gatory. The  report  of  the  commission  for  1904  shows  the 
number  of  railway  accidents  from  1888  to  June  30,1904. 
The  number  of  employees  killed  was:  in  1888,  2,070;  in 
1904,  3,632;  injured:  in  1888,  20,148;  in  1904,  67,o67.21 
There  has  been  an  actual  increase  in  every  class  of  casualty, 
with  employees,  passengers,  and  others.  The  use  of  safety 
devices  of  certain  kinds,  introduced  after  long  opposition 
and  delay,  has  diminished  the  frequency  of  casualties  result- 
ing from  coupling  and  uncoupling  cars.  But  from  other 
causes  the  danger  of  accident  has  increased  both  relatively 
and  absolutely.  "In  1894  the  liability  to  fatal  injury  to 
employees  was  as  i  to  428;  in  1904  it  stands  as  i  to  357. 
If  this  comparison  be  made  for  trainmen,  the  liability  to 
fatal  accidents  in  1894  was  as  i  to  156;  in  1904  it  was  as 
i  to  120."  If  the  corporations  were  legally  obliged  to  pay 
all  the  premiums  for  accident  insurance,  as  is  done  in  Ger- 
many, instead  of  throwing  most  of  the  cost  on  their  em- 
ployees, this  increase  of  disabling  and  fatal  casualties  would 
be  reduced.  The  managers  would  discover  devices  for 
preventing  this  economic  leak.  So  long  as  they  can  compel 
the  workmen  to  bear  the  larger  part  of  this  burden  this 
incentive  to  discover  and  introduce  safety  appliances  is 
wanting. 

The  question  is  often  discussed  whether  membership  is 
compulsory  or  voluntary;  for  the  situation  is  all  the  more 
irritating  to  the  men  if  they  believe  that  they  are  economi- 

21 A  statement  of  the  Interstate  Commerce  Commission,  July  8,  1908, 
says  that  during  the  year  ending  June  30,  1907,  i  trainman  was  killed 
for  every  125  employed,  and  i  was  injured  for  every  8  employed.  A 
bad  showing. 


248  INDUSTRIAL  INSURANCE 

cally  compelled  to  sign  contracts  which  they  regard  as 
inequitable.  The  testimony  of  Mr.  E.  E.  Clark  places  be- 
yond question  the  fact  that  the  employees  do  regard  them- 
selves obliged  to  become  members  even  against  their 
judgment  and  desire  as  a  condition  of  securing  or  retaining 
employment  or  of  promotion.  Mr.  Riebenack's  statement 
may  be  regarded  as  the  official  view  of  the  companies : 

Membership  is  purely  voluntary.  As  a  matter  of  fact  compulsory 
membership  is  prohibited  by  the  United  States  Arbitration  Act  of 
June  i,  1898.  It  is  sometimes  held  that  membership  is  nominally 
voluntary  but  practically  compulsory.  This  view  undoubtedly  rises 
from  the  circumstance  that  the  companies,  in  accordance  with  the 
principle  observed  by  all  large  business  undertakings  requiring  the 
constant  employment  of  large  numbers  of  men,  exercise  the  generally 
conceded  right  to  decide  upon  the  physical  fitness  and  general  qualifi- 
cations of  applicants  for  positions  in  their  service.  In  carrying  out 
this  principle  the  discriminations  made  between  applicants  may  appear 
to  the  uninformed  to  indicate  a  disposition  to  enforce  compulsory 
membership This  is  an  erroneous  conclusion.22 

But  in  another  place  he  says : 

In  reductions  of  force,  temporary  or  permanent,  preference  as  to 
retention  in  the  service  will  be  given  members  of  the  Relief  feature, 
other  things  being  equal,  over  those  in  the  same  grades  of  service  who 
are  not  connected  with  said  feature.83 

It  is  precisely  this  kind  of  preference  which  the  employees 
feel  to  be  "compulsion." 

Age  classification  in  relation  to  death  benefits.24 — The 
premiums  paid  by  the  men  are  classified  by  wage-earnings 
but  not  by  ages.  The  fund  thus  raised  is  held  for  payments 
of  indemnities  not  only  for  sickness  and  accident  but  also 
for  death;  and  in  this  latter  fact  we  come  into  the  field  of 
life  insurance.  It  is  a  generally  accepted  principle  of  life 

22  Op.  cit.,  p.  32. 

wlbid.,  p.  45- 

24  Ibid.,  pp.  311,  312. 


INSURANCE  PLANS  OF  RAILWAY  CORPORATIONS     249 

insurance  that  premiums  ought  to  be  graduated  according 
to  age,  since  it  is  unjust  to  compel  a  young  man  to  pay  as 
much  as  an  older  man.  Perhaps  it  would  be  difficult  in 
practice  to  grade  the  premiums  by  ages  so  long  as  all  are 
paid  confusedly  into  one  fund;  and  this  would  seem  to  be 
an  objection  to  such  confusion.  An  element  of  unfairness 
remains  which  could  be  removed  only  by  treating  each  kind 
of  insurance  apart,  and  fixing  the  premiums  to  meet  the 
average  risk  by  age  and  by  form  of  occupation. 

That  part  of  the  fund  which  is  paid  by  the  employees 
for  life  insurance  proper  (death  benefits)  was  paid  with  the 
hope  and  expectation  and  understanding  that  it  should  be 
available  for  their  families  in  case  of  death.  The  part  paid 
for  protection  in  case  of  disablement  by  accident  or  illness 
was  contributed  only  to  meet  the  needs  of  the  current  year. 
When  the  corporations  upon  discharging  a  man  decline  to 
reserve  for  him  any  equitable  claim  on  the  fund  they  violate 
a  plain  moral  right  which  life  insurance  practice  and  legis- 
lation have  long  recognized.  That  the  workman  is  required 
to  sign  away  this  claim  in  advance  when  he  enters  the  relief 
department  does  not  alter  the  fundamental  moral  equities  of 
the  situation.  Here  also  the  failure  to  distinguish  between 
accident  and  sickness  insurance  on  one  side  and  death  bene- 
fits on  the  other  leads  to  error  and  wrong.  It  is  fair  now 
to  quote  the  defense  made  by  the  official  representative  of 
the  railway  departments : 

No  provision  is  made  for  the  return  to  members  of  the  relief  fund 
who  leave  either  the  service  or  the  fund,  of  any  proportion  of  their 
contributions,  for  the  reason  that  during  their  connection  therewith 
they  have  been  protected  against  sickness  and  accident  at  a  minimum 
cost,  and  to  make  repayments  would  necessitate  an  increase  in  rates, 
which  would  entail  added  expense  to  all  members.  It  is  also  a  fact 
that  the  laws  of  some  states  prohibit  the  continuance  of  fund  death 
benefits  after  employees  leave  the  service  of  the  interested  corpora- 


250  INDUSTRIAL  INSURANCE 

tion,  as  being  an  infringment  on  and  violation  of  existing  legislation 
for  the  government  of  insurance  practice. 

In  some  companies  the  right  to  continue  in  the  fund  after 
leaving  the  service,  on  condition  of  regular  payments  of 
dues,  is  recognized. 

These  criticisms,  if  valid,  prove  only  that  the  schemes 
ought  to  be  revised  and  improved;  in  spite  of  them  it  re- 
mains true  that  the  relief  departments  secure  accident  and 
sickness  insurance  at  relatively  low  cost  and  represent  an 
important  advance  on  the  conditions  before  their  establish- 
ment. The  next  step  is  to  secure  national  and  state  legis- 
lation requiring  the  companies  to  furnish  adequate  insurance 
against  loss  by  accident,  disease,  and  invalidism  due  to  the 
employment,  on  condition  that  they  be  released  from  further 
liability,  except  in  case  of  wilful  negligence  and  violation 
of  laws  requiring  protective  devices. 


CHAPTER  IX 

MUNICIPAL  PENSION   SYSTEMS  AND   PENSIONS   FOR 
TEACHERS 

It  is  in  the  field  of  social  care  for  firemen,  policemen,  and 
teachers  of  public  schools  that  Americans  are  preparing  their 
own  minds  most  directly  for  industrial  insurance,  and  it 
is  there  they  are  working  out  methods  and  constructing 
administrative  machinery  which  will  be  models  for  the  sys- 
tem of  compulsory  insurance  of  workingmen  which  seems 
almost  at  the  door.  The  firemen  and  policemen  are  exposed 
to  perils  which  make  their  appeal  to  the  popular  imagination, 
although  loss  of  limb  and  life  may  be  actually  no  greater 
than  in  several  important  industries.  The  servants  of  the 
public  are  constantly  before  the  eyes  of  citizens,  their 
exploits  are  heralded  by  the  newspapers,  and  their  deaths 
are  made  known  to  the  world.  Something  of  the  glory  of 
soldiers  surrounds  their  activities  in  defense  of  property 
and  life.  Formerly  the  injured  firemen  and  policemen,  or 
the  families  of  those  killed  in  the  course  of  duty,  were  aided 
chiefly  by  charity  balls  for  which  tickets  were  peddled  by 
policemen  from  door  to  door,  and  this  up  to  very  recent 
times.  This  method  was  annoying  to  the  public  and  hu- 
miliating to  municipal  employees,  and  it  seriously  interfered 
at  times  with  their  regular  duties. 

Then  came  the  voluntary  associations  of  firemen  and  of 
policemen,  with  their  monthly  dues  and  benefits  at  death. 
But  this  method  was  also  inadequate,  uncertain,  and  unre- 
liable. Within  recent  years  a  regular  system  of  municipal 
insurance  has  been  legally  established  in  several  cities  of  the 
United  States,  and  methods  are  gradually  improved  and 
developed.  We  find  record  of  a  law  of  New  York  enacted 

251 


252  INDUSTRIAL  INSURANCE 

in  1871  providing  for  pensions  of  firemen,  and  in  1878  the 
policemen  were  similarly  protected.  The  systems  of  various 
cities  are  by  no  means  equally  complete.  In  some  places 
only  retired  and  disabled  officers  are  pensioned,  while  else- 
where widows,  orphans,  and  dependent  parents  are  aided. 

The  motives  which  have  been  effective  in  establishing 
these  systems  are  worthy  of  note,  for  their  significance  ex- 
tends far  beyond  their  present  sphere  of  action.  First  of  all, 
it  is  felt  to  be  shameful  to  permit  the  family  of  a  man  who 
died  in  the  effort  to  protect  life  and  goods  to  live  in  want 
and  misery;  the  feeling  which  established  veterans'  pension 
funds  is  alive  in  these  organizations.  Furthermore  the 
failure  of  the  unaided  efforts  of  the  officers  in  their  mutual 
benefit  associations  showed  the  necessity  for  a  larger  meas- 
ure of  municipal  direction  and  public  assistance.  Then  it 
became  clear  that  the  pension  funds  enable  faithful  men  to 
give  their  undivided  attention  to  the  service  of  the  public 
without  distraction  of  schemes  to  make  money  for  old-age 
support  in  addition  to  the  work  of  each  day.  Pensions  for 
disability  and  old  age  tend  to  make  the  officer  more  faithful, 
careful,  sober,  steady,  and  to  retain  him  in  the  service  of 
the  city.  The  hope  of  a  pension  at  the  end  of  a  long  period 
prevents  frequent  changes  in  the  force,  since  men  are  not 
apt  to  desert  an  employment  after  a  time  and  thereby  lose 
their  claim  on  support  in  the  time  of  old  age. 

A  somewhat  detailed  description  of  the  Chicago  system 
may  serve  to  illustrate  the  tendency  in  our  cities,  and  to 
afford  a  more  definite  and  adequate  conception  of  kindred 
schemes  elsewhere. 

The  police  fund  is  controlled  according  to  a  state  law.1 
The  law  of  April  29,  1887,  is  the  basis.  There  are  several 
sources  of  income  mentioned  in  the  law :  ( i )  three- fourths 
of  all  moneys  received  for  taxes  or  for  licenses  on  dogs; 

1  Kurd,  Illinois  Statistics,   1903,  pp.  364-68. 


MUNICIPAL  PENSION  SYSTEMS  253 

(2)  three  per  cent,  of  licenses  of  saloons  and  wholesale 
liquor  dealers;  (3)  moneys  paid  for  special  services  of 
policemen;  (4)  one  per  cent,  of  the  monthly  pension  of 
each  pensioned  policeman ;  ( 5 )  fines  imposed  on  policemen 
as  a  disciplinary  measure;  (6)  the  proceeds  of  sale  of  lost 
or  stolen  property  unclaimed  from  pawnbrokers,  second- 
hand dealers,  and  junk  stores;  (8)  fees  and  fines  for  carry- 
ing concealed  weapons;  (9)  one-half  of  costs  collected 
for  violating  city  ordinances ;  (10)  rewards  given  to  police- 
men, unless  exception  is  made  by  chief  of  police;  (n)  one 
per  cent,  of  monthly  salary  deducted  from  pay-roll;  (12) 
three  per  cent,  of  all  licenses  not  already  mentioned  up  to 
$25,000  per  annum  (law  amended,  1903). 

After  the  fiftieth  year  of  age  and  the  twentieth  year  of 
service  the  policeman  is  entitled  to  a  pension  of  50  per  cent, 
of  his  former  annual  salary,  but  not  more  than  $900  nor 
less  than  $600.  In  case  of  his  death  the  widow  receives  the 
pension  until  her  remarriage  and  the  children  until  they  are 
sixteen  years  old.  If  the  policeman  is  disabled  in  service 
he  receives  a  pension.  The  figures  for  1906  show  the 
following  results :  Officers  who  have  retired  after  a  service 
of  20  years,  136;  widows  of  officers  who  had  served  20 
years,  44 ;  beneficiaries  on  account  of  disablement  in  service, 
26;  widows  of  officers  who  died  in  the  service,  86;  widows 
of  officers  who  died  after  service  of  10  years,  157 ;  guardians 
of  minor  children,  14;  total  number  of  beneficiaries,  463. 
The  monthly  pay-roll  of  the  fund  calls  for  $22,000.  The 
monthly  income  is  $23,000.  This  apparently  indicates  an 
accumulation  in  the  general  fund ;  but  in  fact  the  number  of 
pensioners  increases  faster  than  the  income.  It  was  the 
intention  of  the  founders  of  the  fund  to  set  aside  out  of  the 
surplus  a  fund  for  investment  of  $300,000,  but  the  revenues 
have  not  made  it  possible  to  realize  this  hope.  In  order  to 
spur  the  members  of  the  corps  to  faithful  activity  in  defense 


254  INDUSTRIAL  INSURANCE 

of  the  public  a  notice  was  issued  to  the  officers  which  called 
their  attention  to  the  fact  that  according  to  the  law  their 
pension  fund  would  be  augmented  by  fees  and  fines  col- 
lected by  them.  The  tendency  of  course  is  to  keep  the 
policemen  alert  and  active  in  discovering  and  arresting 
violators  of  city  ordinances  and  state  laws.  No  record 
enables  us  to  say  how  much  this  salutary  influence  is  weak- 
ened by  direct  bribes  paid  into  the  hands  of  officers  to  induce 
them  to  relax  their  vigilance.  The  administration  of  the 
fund  rests  with  a  board  composed  of  5  persons;  of  whom 
3  are  chosen  by  the  mayor  and  2  are  elected  by  the  officers 
themselves. 

The  firemen's  fund  of  Chicago  is  based  on  the  same 
principles  as  those  of  the  policemen's  fund.  The  law  of 
Illinois  in  accordance  with  which  the  fund  is  governed2  pro- 
vides that  the  fund  shall  be  fed  from  various  specified 
sources:  one  per  cent,  of  license  fees;  not  to  exceed  one 
per  cent,  of  the  salary  of  members,  to  be  deducted  monthly 
from  pay-roll;  all  rewards,  fees,  gifts,  and  emoluments  paid 
for  extraordinary  services,  unless  specially  granted  to  the 
member  by  the  board ;  fines  and  penalties  imposed  on  mem- 
bers of  the  departments;  gifts  and  legacies,  if  any;  interest 
on  invested  funds  up  to  $200,000;  up  to  2  per  cent,  of  gross 
receipts  of  foreign  fire  insurance  companies,  that  is  com- 
panies not  chartered  in  Illinois.  The  board  of  trustees  of 
the  Firemen's  Pension  Fund  is  composed  of  the  treasurer, 
clerk,  attorney,  marshal  or  chief  officer  of  the  fire  depart- 
ment, and  the  comptroller  of  the  city.  This  board  has  power 
to  administer  the  fund  and  to  decide  all  questions  as  to 
applications  for  benefits  without  appeal.  The  board  reports 
to  the  municipal  council.  During  the  year  1905-6  the  total 
number  of  pensioners  was  449;  the  monthly  income  of  the 
fund,  $9,500;  monthly  pensions  paid,  $11,000;  amount 

"  Hurd,  Illinois  Statutes,  1903,  p.  368. 


MUNICIPAL  PENSION  SYSTEMS  255 

accumulated  toward  permanent  fund,  $151,000.  All  claims 
are  paid  in  full.  The  income  did  not  meet  all  needs  and  the 
permanent  fund  has  been  drawn  upon  to  prevent  deficits. 
But  plans  have  been  made  for  doubling  the  fees  taken  from 
foreign  insurance  companies.  The  fund  is  not  large  enough 
to  retire  some  of  the  older  men  who  ought  to  be  retired. 
The  rates  of  benefits  at  retirement  are:  for  disability, 
monthly  one-half  of  the  former  salary;  the  widow  of  a 
member  who  dies  in  the  service,  receives,  so  long  as  she 
remains  unmarried,  $30  monthly;  the  guardian  of  minor 
offspring,  $6  for  each  child  up  to  sixteen  years  of  age;  in 
all  not  exceeding  one-half  the  monthly  salary.  After  22 
years  of  service  a  member  who  is  fifty  years  of  age  may 
be  retired  with  a  pension  of  one-half  his  monthly  salary; 
light  duties  may  be  assigned  to  those  who  are  able  to  work, 
if  emergencies  exist;  after  decease  his  widow  until  her 
marriage  and  his  young  children  have  the  pension.  By  an 
ordinance  of  the  city  of  Chicago  a  member  of  the  fire  de- 
partment who  is  disabled  may  receive  his  full  salary  for  12 
months.  This  is  true  also  of  policemen,  but  the  pension  is 
not  paid  during  this  period. 

The  fund  of  the  fire-insurance  patrolmen,  employees  of 
the  board  of  underwriters,  is  interesting.  It  is  administered 
by  a  board  of  trustees.  The  income  is  derived  from  an 
assessment  of  i  per  cent,  of  the  salary  deducted  monthly 
from  pay-roll ;  up  to  2  per  cent,  of  funds  devoted  to  support 
of  fire-insurance  patrol  by  the  insurance  companies;  all  re- 
wards, fees,  gifts  on  account  of  extraordinary  service  (un- 
less specially  granted  by  the  board)  ;  and  interest  on  any 
fund  accumulated.  The  benefits  assured  are:  disability,  re- 
tirement pension  of  one-half  the  salary;  in  case  of  death,  the 
widow  of  a  member  receives,  until  she  is  remarried,  $30  a 
month,  the  children  receiving  $6  each  up  to  the  sixteenth 
year  of  age;  in  all  not  more  than  one-half  the  salary.  If 


256  INDUSTRIAL  INSURANCE 

the  expenditures  outrun  the  income  the  benefits  are  propor- 
tionately scaled  down.  In  case  of  retirement  after  the  fifti- 
eth year  of  age  and  the  twenty-second  year  of  service  the 
pension  is  one-half  the  salary.  These  pensions  cannot  be 
attached  for  debts.  At  the  time  of  the  report  (1905-6)  the 
number  of  fire-insurance  patrol  companies  in  Chicago  was 
8;  the  pensioners,  9  (one  widow,  one  disabled  man,  and  6 
children) ;  monthly  payments,  $139.16.  The  cost  of  operat- 
ing the  department  is  $130,000  per  year,  of  which  2  per 
cent,  goes  to  the  fund.  The  permanent  fund  is  $100,000. 

Here  we  have  a  private  corporation  which  has  been 
granted  by  state  law  the  right  to  assess  the  salaries  of  its 
employees  i  per  cent,  and  to  create  a  fund  to  which  the  fire- 
insurance  companies  contribute  about  i  per  cent,  of  prem- 
iums collected.  This  is  apparently  compulsory  insurance  and 
covers  accident,  sickness,  invalidism,  old  age,  and  pensions 
to  widows  and  orphans.  This  fund  raises  very  interesting 
questions  about  the  constitutionality  of  such  a  law,  the  right 
of  injured  employees  to  sue  under  the  employers'  liability 
law,  and  the  cost  of  premiums  of  such  insurance.3 

PENSIONS  FOR  PUBLIC  SCHOOL  TEACHERS 

It  seems  desirable  to  treat  this  subject  briefly  in  connec- 
tion with  industrial  insurance  because  it  is  a  system  in  which 
the  principle  of  public  care  of  low-paid  employees  is  in- 
volved ;  because  the  teachers  of  American  cities  are  in  close 
contact  with  the  population  of  wage-earners;  and  because 
the  methods  worked  out  promise  to  help  develop  similar 
provisions  for  workingmen.4  The  need  of  provision  by 

8  The  legislature  of  Illinois  (Acts  of  1905,  pp.  96,  too)  modified  and 
extended  the  provisions  of  former  laws  in  an  act  to  provide  pension 
funds  for  municipal  employees  and  an  amendment  to  the  firemen's  pen- 
sion fund. 

*  REFERENCES  :  Report  of  Committee  on  Salaries,  Tenure  and  Pen- 
sions, of  National  Educational  Association,  1905 ;  W.  F.  Willcox,  Bulle- 


MUNICIPAL  PENSION  SYSTEMS  257 

pensions  for  invalidism  and  old  age  has  long  been  keenly 
felt  among  those  who  desire  to  make  teaching  a  life  pro- 
fession. The  salaries  are  painfully  inadequate  to  cover 
the  cost  of  such  provision.  Numerous  and  pathetic  attempts 
have  been  made  by  teachers  themselves  to  organize  insur- 
ance and  the  entire  subject  has  been  carefully  investigated 
by  a  committee  of  the  National  Education  Association. 

In  the  year  1900  there  were  in  the  United  States  446,133 
teachers  (118,519  male,  327,614  female).  In  each  state 
and  territory  the  ratio  of  teachers  to  the  total  population 
of  persons  between  five  and  twenty-four  years  of  age  has 
increased.  In  continental  United  States  26.6  per  cent,  of 
the  teachers  are  males  and  73.4  per  cent,  are  females.  The 
percentage  of  male  teachers  is  decreasing  and  that  of  female 
teachers  is  increasing.  In  the  cities  with  over  25,000  in- 
habitants of  every  main  division  of  the  Union  about  80  per 
cent,  are  women;  in  the  country  the  percentage  of  women 
teachers  varies  from  59.5  in  the  South  Central  division  to 
77.2  in  the  North  Atlantic  division.  The  median  age  of 
teachers  has  increased.5 

The  exhibit  of  salary  schedules  will  show  the  need  of 
pensions.  The  ordinary  teacher  belongs  economically  to 
the  so-called  "proletarians,"  and  the  recent  organizations 
of  trade-unions  in  affiliation  with  the  American  Federation 
of  Labor  are  indications  that  many  of  the  urban  teachers 
share  thoroughly  the  "class  consciousness"  of  the  wage- 
earners.  The  report  of  the  National  Education  Association 
on  salaries  and  tenure  says : 

On  the  basis  of  fifty  weeks  of  work  during  the  year  the  earnings 
of  the  laborers  would  in  nearly  every  city  exceed  those  of  the  lowest 
paid  elementary  teachers.  The  wages  of  laborers  here  given  represent, 

tin  23,  Census  Statistics  of  Teachers,  Bureau  of  the  Census,   1905;  Report 
of  Commissioner  of  Education,  1902,  p.  712;   1903,  p.  2449;   1907,  p.  448. 
0  Bulletin  23,  Census  Statistics  of  Teachers,  by  W.  F.  Willcox. 


258  INDUSTRIAL  INSURANCE 

it  should  be  remembered,  the  earnings  of  the  commonest  untrained 
labor,  while  in  scarcely  any  city  of  importance  can  a  man  or  woman 
secure  a  position  as  teacher  without  some  previous  experience  or 
special  preparation  (Report,  pp.  146,  147). 

The  minimum  yearly  salaries  of  teachers  in  elementary 
schools  ranged  from  $216  (Burlington,  Vt.)  to  $552 
(Boston)  and  $600  in  San  Francisco,  where  cost  of  living 
is  high.  As  illustrations  of  annual  salaries  in  typical  un- 
graded rural  schools  we  may  cite:  in  Minnesota  the  range 
is  from  $320  to  $450  for  men  and  $200  to  $450  for  women ; 
in  Iowa  $180  to  $300  for  men  and  $143  to  $360  for 
women. 

Naturally  the  tendency  under  these  conditions  is  to  keep 
men  out  of  the  teaching  profession  and  give  over  the  schools 
to  young  and  relatively  inexperienced  girls.  There  is  no 
outlook  for  old  age  in  the  work  of  public-school  teachers. 
In  cities  of  8,000  or  over  in  1904,  50  per  cent,  of  all  the 
male  teachers  had  been. engaged  in  teaching  less  than  13 
years,  while  of  the  female  teachers  53  per  cent,  are  found 
to  have  been  in  the  profession  less  than  10  years;  for  all 
the  teachers  in  these  333  cities  considered  together  51.7 
per  cent,  had  taught  less  than  10  years;  10  per  cent,  of  the 
men  and  4.5  per  cent,  of  women  had  taught  30  years  or 
over. 

The  report  of  the  National  Education  Association  on 
salaries  makes  a  distinction  between  a  pension  system  in  the 
proper  sense  and  various  schemes  of  mutual  aid,  including 
retirement  funds  and  old-age  stipends,  maintained  primarily 
by  teachers  themselves  and  at  their  own  expense.  The  pub- 
lic authorities  have  hardly  made  a  beginning  in  the  recogni- 
tion of  a  state  duty  to  care  for  outworn  teachers,  and  the 
service  suffers  in  many  ways  from  this  neglect.  Here  and 
there  we  mark  the  beginnings  of  better  things.  In  the  year 
1905  Mr.  Andrew  Carnegie  showed  his  appreciation  of  the 


MUNICIPAL  PENSION  SYSTEMS  259 

situation  by  establishing  his  great  fund  of  $10,000,000  for 
pensioning  college  professors.  Already  the  beneficial  influ- 
ence of  this  great  gift  is  felt  in  higher  education.  It  marks 
the  way  for  future  development  in  elementary  and  second- 
ary education.  The  need  for  accident  insurance  is  not  much 
felt  among  teachers ;  the  chief  need  is  provision  for  illness, 
invalidism,  and  old  age.  Sickness  insurance  may  easily  be 
provided  through  mutual  benefit  associations,  but  old-age 
pensions  require  more  solid  foundations  and  larger  funds 
carefully  guarded. 

The  most  direct  and  primitive  method  of  providing 
benefits  is  through  a  voluntary  association  of  the  teach- 
ers themselves,  without  invoking  authority  or  subsidy  from 
the  public.  Thus  we  find  mutual  benefit  associations,  for 
temporary  aid  only,  in  Baltimore,  St.  Louis,  Cincinnati, 
Cleveland,  Buffalo,  San  Francisco,  and  St.  Paul.  These  call 
for  $i  to  $2  initiation  fee  and  $i  to  $5  annual  dues.  Special  j 
assessments  are  sometimes  made.  Benefits  in  sickness  range 
from  50  cents  a  day  to  $10  a  week;  at  death  funeral  ex- 
penses only  are  paid  in  some  instances,  and  in  others  a  sum 
equal  to  $i  from  each  member  of  the  association. 

Associations  for  annuity,  or  retirement  fund  only,  are 
found  in  New  York,  Boston,  and  Baltimore,  and  there  is 
an  annuity  guild  in  Massachusetts.  The  initiation  fees 
are  $3  to  $5.  The  annual  dues  are  from  $5  to  $6  per  week, 
The  time  of  service  required  before  enjoyment  of  the  an- 
nuity is  from  two  to  five  years  with  disability,  or  thirty-five 
to  forty  without  disability.  In  Harrisburg,  Pa.,  the  teachers 
maintain  a  voluntary  pension  or  annuity  fund,  but  receive 
no  assistance  from  the  board.  A  somewhat  similar  arrange- 
ment is  reported  from  Norwich,  Conn.  Philadelphia  has  a 
charity  fund,  known  as  the  Elkins  Fund,  of  $1,000,000 
which  provides  for  superannuated  and  indigent  teachers. 
The  report  of  the  National  Educational  Association  marks 


260  INDUSTRIAL  INSURANCE 

a  natural  tendency  to  abandon  or  merge  the  voluntary 
schemes  where  the  stronger  and  more  reliable  legal  measures 
gain  a  footing. 

The  necessity  for  having  a  legal  basis  for  pension  funds 
found  expression  in  plans  for  requiring  teachers  to  permit 
the  deduction  of  a  part  of  their  salary  for  the  maintenance 
of  the  fund.  Such  a  law  was  passed  in  Ohio,  but  it  was 
resisted  by  teachers  of  Toledo  and  failed  in  a  test  case 
before  the  Supreme  Court  of  the  state.  The  Supreme  Court 
of  Minnesota  annulled  a  similar  law  which  was  made  for 
the  city  of  Minneapolis.  Perhaps  these  schemes  ought  to 
be  defeated  since  they  do  not  rest  on  any  well-defined  public 
policy  of  care  for  teachers  at  public  expense,  but  merely 
impose  the  burden  on  the  teachers  themselves  who  need  all 
their  salaries  for  immediate  use,  and  whose  brief  tenure 
does  not  warrant  sacrifices  for  those  who  continue  in  the 
service. 

The  teachers  who  were  anxious  to  establish  pension 
funds  have  sought  to  avoid  the  constitutional  objections 
which  annulled  the  Ohio  and  Minnesota  laws  by  creating 
a  fund  out  of.  voluntary  contributions  supplemented  by  fines, 
donations,  and  other  uncertain  and  irregular  sources  of  in- 
come. Laws  authorizing  such  a  plan  for  all  cities  and 
counties  of  the  state  now  exist  in  New  Jersey,  Ohio,  and 
California;  and  applying  to  cities  of  100,000  inhabitants 
or  more,  in  Illinois.  The  Illinois  law6  has  recently  been 

6  The  essential  features  of  the  new  Illinois  law  for  the  Teachers' 
Pension  Fund  in  Chicago  are :  The  administration  of  the  fund  is  com- 
mitted to  a  board  of  trustees  of  nine  members,  the  secretary  of  the 
Board  of  Education,  ex-officio,  two  members  of  the  Board  of  Education, 
and  six  members  elected  by  the  teachers  who  contribute  to  the  fund. 
The  Public  School  Teachers'  Pension  and  Retirement  Fund  consists  of 
money  paid  in  by  persons  desiring  the  benefits  thereof,  and  of  gifts  or 
bequests  and  other  sources  not  yet  known.  Teachers  contributing  to  the 
fund  are  divided  into  four  classes:  (i)  those  who  have  taught  five  years 
or  less ;  (2)  those  who  have  taught  more  than  five  years  and  not  more 


MUNICIPAL  PENSION  SYSTEMS  261 

improved  for  it  has  long  been  regarded  as  very  unsatis- 
factory. There  is  a  law  in  Massachusetts  which  applies  to 
Boston,  and  another  to  other  towns  and  cities;  in  Rhode 
Island  applying  to  Providence;  and  in  New  York  and 
Michigan  limited  in  action  to  certain  cities. 

Another  stage  of  development  is  marked  by  state  laws 
which  provide  state  funds  to  be  administered  by  local  or 
state  organs.  The  Maryland  law  of  1902  is  a  type  of  ad- 
vanced action  by  a  commonwealth : 

Whenever  any  person  in  this  state  has  taught  in  any  of  the  public 
or  normal  schools  thereof  twenty-five  years,  and  has  reached  the  age 
of  sixty  years,  and  his  or  her  record  as  such  teacher  has  been  with- 
out reproach,  and  by  reason  of  physical  or  mental  disability  or 
infirmity  is  unable  to  teach  longer,  the  said  teacher  may  lay  his  or  her 
case  before  the  State  Board  of  Education,  and  the  said  board  shall 
proceed  to  consider  the  same,  and  if  the  facts  are  found  as  above 
stated,  the  said  teacher  shall  be  placed  upon  a  list,  a  record  of  which 

than  ten  years;  (3)  those  who  have  taught  more  than  ten  years  and  not 
more  than  fifteen  years ;  (4)  those  who  have  taught  more  than  fifteen 
years.  Members  of  the  first  class,  entering  the  service  after  the  passage 
of  this  law,  pay  $5  per  annum ;  those  in  the  second  class  pay  $10 ; 
those  in  the  third  class  pay  $15;  those  in  the  fourth  class  pay  $30; 
those  sums  being  deducted  from  salary  payments.  Teachers  who  have 
withdrawn  from  the  fund  may  be  restored  to  its  privileges  by  return- 
ing all  they  have  withdrawn  and  what  they  would  have  contributed,  with 
4  per  cent,  interest,  and  hereafter  paying  the  sums  due  in  their  class. 

Benefits  are  payable  when  a  member  has  taught  25  years  in  the  public 
schools,  or  after  15  years'  service  if  disabled;  three-fifths  of  the  period 
of  service  being  in  the  city.  The  pension  after  25  years'  service  is  $400  per 
annum;  and  in  case  of  disabled  teachers,  after  15  years'  service,  "such  pro- 
portion of  the  full  annuity  of  $400  as  the  sum  contributed  by  such  teacher 
bears  to  the  total  contribution  required  for  a  full  annuity." 

The  city  treasurer  is  ex-oihcio  custodian  of  the  fund.  If  a  teacher  is 
not  re-employed  or  is  discharged,  then  such  teacher  shall  be  paid  back  the 
money  he  or  she  may  have  contributed  under  this  law.  Any  teacher  who 
shall  retire  voluntarily  from  the  service,  prior  to  entering  the  fourth 
class,  shall  receive  a  refund  of  one-half  of  the  money  he  or  she  shall 
have  contributed  under  this  law.  Annuities  and  pensions  are  exempt 
from  attachment  or  garnishment  or  any  claim  of  creditors.  It  is  too 
early  to  form  a  judgment  as  to  the  value  of  the  new  plan. 


262  INDUSTRIAL  INSURANCE 

shall  be  kept  by  said  board,  to  be  known  as  the  "teachers'  retired 
list,"  and  the  names  upon  said  "teachers'  retired  list"  shall  be  regu- 
larly certified  by  said  board  to  the  comptroller  of  the  treasury  of  this 
state,  and  every  person  so  placed  upon  the  said  retired  list  shall  be 
entitled  to  receive  a  pension  from  this  state  of  $200  per  annum,  to  be 
paid  quarterly  by  the  treasurer  of  this  state  upon  the  warrant  of  the 
comptroller. 

It  is  interesting  to  notice  that  in  this  first  distinct  pension 
system  for  teachers  a  state  board  acquires  an  administrative 
function  and  power;  and  that  the  state  acts  independently 
of  local  bodies,  as  cities  and  towns.  This  method  alone 
gives  promise  that  all  will  be  treated  impartially  and  that 
local  indifference  and  incompetence  will  not  defeat  the 
righteous  purpose  of  the  law.  We  find  here  a  valuable 
suggestion  for  the  way  in  which  the  state  must  go  about 
establishing  an  effective  plan  of  industrial  insurance. 

We  may  here  examine  the  systems  of  three  cities  which 
seem  to  have  developed  most  thoroughly  a  system  of  pen- 
sions, New  York,  Detroit,  and  San  Francisco.  The 
systems  of  Chicago,  Charleston,  and  Jersey  City  are  sup- 
ported merely  by  deductions  from  salaries,  with  supple- 
mentary gifts  from  unreliable  sources.  The  Poughkeepsie 
plan  provides  that  2  per  cent,  of  the  salaries  be  turned  into 
the  pension  fund,  while  sums  deducted  for  absence  from 
duty,  donations  and  legacies,  are  auxiliary  sources.  The 
law  for  this  scheme  was  passed  in  1902.  In  the  city  of 
Greater  New  York  the  retirement  fund  is  fed  from  money 
forfeited  or  withheld  for  absence  from  duty,  money  re- 
ceived from  gifts  and  bequests,  5  per  cent,  of  all  excise 
money  or  fees  from  licenses  granted  to  sell  strong  liquors. 
The  annuity  is  one-half  the  salary  at  the  date  of  retirement, 
provided  it  does  not  exceed  $1,000  in  the  case  of  a  teacher 
or  $1,500  in  the  case  of  a  principal  or  superintendent;  nor 
shall  any  pension  fall  below  $600. 


MUNICIPAL  PENSION  SYSTEMS  263 

In  the  city  of  Detroit  the  fund  is  supported  from  gifts 
and  legacies;  from  money  appropriated  by  the  board  of 
education  or  raised  by  act  of  the  common  council  and  board 
of  estimates ;  tuition  fees  of  non-resident  pupils ;  interest  on 
daily  balances  of  moneys  appropriated  for  teachers'  salaries ; 
moneys  which  the  trustees  of  the  retirement  fund  may  trans- 
fer from  the  general  fund.  The  general  fund  consists  of 
deductions  from  salaries  of  teachers,  not  less  than  i  per 
cent,  nor  more  than  3  per  cent.,  no  deduction  being  made  on 
a  basis  of  more  than  $1,000;  income  from  interest  of  general 
fund;  all  moneys  deducted  from  teachers'  salaries  for  ab- 
sence or  for  any  cause;  all  moneys  intended  for  the  retire- 
ment fund  and  not  left  specifically  to  the  permanent  fund. 
The  board  of  trustees  consists  of  the  president  of  the  board 
of  education,  the  president  pro  tempore  of  the  board  of  edu- 
cation, the  chairman  of  the  committee  on  teachers  and 
schools  of  the  board  of  education ;  the  superintendent  of  city 
schools,  and  three  teachers  in  the  city  schools  elected  from 
contributors  to  the  retirement  fund  by  ballot,  as  the  board 
of  trustees  shall  prescribe,  for  a  term  of  three  years,  one 
teacher  being  elected  each  year.  The  rate  of  deduction 
from  salaries  is  determined  by  the  board  of  education  on 
advice  of  the  trustees  of  the  fund.  When  the  permanent 
fund  has  reached  $100,000  no  additions  shall  be  made  to 
it  from  salaries,  except  by  a  two-thirds  vote  of  the  board  of 
education.  The  term  of  service  required  before  a  pension 
can  be  drawn  is  30  years,  of  which  20  years  must  be  in 
Detroit,  or  25  years  in  the  schools  of  Detroit.  Teachers  in- 
capacitated for  duty,  having  taught  20  years,  of  which  10 
have  been  passed  in  Detroit,  may  be  retired  by  a  two-thirds 
vote  of  the  board  of  trustees.  Teachers  who  resign  or  are 
removed  for  cause,  may  apply  after  three  months  for  such 
portion  of  money  contributed  by  them  as  the  trustees  shall 
direct,  not  to  exceed  one-half  of  their  contributions.  An- 


264  INDUSTRIAL  INSURANCE 

nuities  are  not  to  exceed  $250.  Current  expenses  of  the 
board  of  trustees  are  paid  from  a  maintenance  fund  of  the 
board  of  education. 

The  sources  of  the  fund  in  San  Francisco  are:  assess- 
ments of  $12  per  year  deducted  from  the  salaries  of  day 
teachers  and  $6  per  year  from  the  salaries  of  evening-school 
teachers  receiving  less  than  $50  per  month;  gifts  and  lega- 
cies, and  not  less  than  one-half  the  sums  forfeited  by 
absence  from  duty.  The  permanent  fund  is  composed  of 
25  per  cent,  of  all  moneys  from  these  sources  to  the  amount 
of  $50,000  and  of  all  gifts  specifically  bequeathed.  The 
fund  is  administered  by  a  commission  consisting  of  the 
mayor,  the  superintendent  of  schools  and  the  county 
treasurer  who  reports  biennially  to  the  supervisors.  The 
retirement  committee  consists  of  five  teachers,  one  at  least 
from  primary,  and  one  from  grammar  schools,  elected  for 
3  years.  The  term  of  service  is  30  years,  with  30  years' 
assessments.  The  annuity  is  $50  per  month.  A  proportion- 
ate annuity  is  paid  to  incapacitated  teachers  who  have  been 
contributors  for  at  least  5  years.  The  annuity  is  suspended 
on  return  to  public-school  teaching,  or  when  incapacity 
ceases,  and  if  the  person  pensioned  has  received  a  sum 
which  has  reimbursed  for  former  contributions.  There  is 
a  provision  for  paying  pro  rata.  Necessary  expenses  are 
paid  from  the  funds.7 

The  law  of  Massachusetts  applying  to  Boston,  passed 
in  1900,  was  compulsory  for  all  teachers  who  entered  service 
after  the  enactment  of  the  law  and  who  voluntarily  came 
under  its  provisions.  The  fund  was  maintained  from  gifts 
and  legacies  and  from  sums  set  apart  by  the  trustees  for 
the  permanent  fund;  there  was  also  the  general  fund  made 
up  of  gifts  and  legacies  not  specifically  assigned  to  the  per- 
manent fund,  amounts  retained  from  salaries  and  the  interest 

''Report  on  Salaries,  etc.,  p.  183. 


MUNICIPAL  PENSION  SYSTEMS  265 

on  the  permanent  fund.  The  Massachusetts  legislature  in 
1908  passed  laws  relating  to  teachers'  pensions,  chaps.  498 
and  589,  Acts  of  1908.  The  latter  act  was  accepted  by  the 
Boston  Board  of  Aldermen  and  the  Common  Council,  and 
was  signed  by  Mayor  Hibbard  on  June  22.  Two  days  later 
the  School  Committee  passed  an  order  appropriating,  for 
this  first  year,  $63,891.51,  which  seems  to  be  five  cents 
per  $1,000  of  valuation.8  Various  cities  have  the  matter 
under  consideration.  According  to  the  new  law  the  School 
Committee  of  Boston  is  required  forthwith  to  establish  a 
permanent  school  pension  fund,  the  rate  of  pension  in  no 
case  to  exceed  $180  per  year.  The  care  of  the  fund  is  vested 
in  a  board  of  three  trustees;  the  city  treasurer  is  custodian. 
The  School  Committee  is  authorized  to  add  to  its  levy  of 
taxes  a  rate  of  five  cents  per  $1,000  of  valuation  to  maintain 
this  fund.  Pensions  cannot  be  paid  beyond  the  resources 
of  this  fund.  The  School  Committee  has  authority  to  retire 
a  teacher  who  has  become  incapacitated  for  duty.  The 
normal  rate  for  persons  of  sixty-five  years  is  $180,  and 
teachers  retired  under  that  age  and  with  less  than  thirty 
years  of  service,  receive  pro  rata  smaller  pensions. 

The  other  act  (chap.  498)  authorizes  the  voters  of  any 
city  or  town  to  establish  a  pension  fund  for  teachers,  and 
to  maintain  it  by  taxation.  The  pension  is  to  be  normally 
one-half  the  salary  at  time  of  retirement  and  never  more 
than  $500. 

The  Ohio  law,  passed  in  May,  1902,  extends  the  benefits 
of  a  permissive  system  to  all  school  districts  of  the  state; 
the  authorities  of  each  school  district  are  granted  the  right 
to  create  a  fund  and  retire  teachers,  but  the  act  does  not 
make  it  mandatory.  The  income  is  derived  from  payments 
by  teachers  of  $2  per  month,  or  $20  a  year,  deducted  from 
the  salaries  of  those  teachers  who  have  declared  a  desire  to 

8  Data  kindly  furnished  by  Mr.  M.  C.  Bradley,  Actuary. 


266  INDUSTRIAL  INSURANCE 

become  contributors  and  subsequently  beneficiaries  of  the 
fund.  The  school  authorities  may  retire  a  teacher  from 
service  on  account  of  mental  or  physical  disability  and  apply 
the  pension  provisions  after  20  years  of  service,  provided 
that  three-fifths  of  that  time  have  been  spent  in  the  service 
of  the  district  or  county  and  two-fifths  in  other  parts  of  the 
state  or  elsewhere.  The  term  teacher  includes  principals  and 
supervisory  officers.  The  right  to  retire  voluntarily  and 
draw  pensions  is  accorded  to  men  and  women  alike  after 
they  have  taught  30  years.  The  amount  paid  is  $10  a  year 
for  every  year  served,  but  is  in  no  case  over  $500  a  year. 
Both  interest  and  principal  may  be  drawn  upon  to  pay 
pensions.  Certificates  are  given  teachers  each  month  show- 
ing what  amount  has  been  withheld  from  their  salaries.  In 
case  a  teacher  resigns  and  retires  from  the  profession  she 
may  claim  one-half  of  the  sum  she  has  paid  into  the  fund 
during  her  service  in  the  school.  The  new  school  code  of 
Ohio,  passed  April  25,  1904,  contains  the  following  clause: 

Any  board  which  has  created,  or  shall  hereafter  create,  a  teachers' 
pension  fund,  shall  pay  into  such  fund  all  deductions,  fines,  penalties, 
and  assessments  made  against  teachers  and  other  employees  of  the 
board.  Such  board  may  also  pay  to  such  pension  fund,  out  of  the 
contingent  fund,  not  to  exceed  2  per  cent,  of  the  amount  raised  by  the 
board  from  taxation. 

The  next  logical  step  will  be  to  make  the  law  mandatory, 
applicable  to  all  teachers  in  all  districts,  make  the  system  a 
state  system  rather  than  local,  and  contribute  a  more  liberal 
sum  from  the  general  taxation.  But  this  will  take  time. 

The  state  of  New  Jersey,  in  Article  27  of  its  school  law, 
provides  for  the  retirement  of  teachers.  A  board  of  trustees 
administers  the  fund  and  pays  annuities  according  to  the 
terms  of  the  law.  Any  teacher  may  be  retired  on  pension 
after  20  years  of  service,  in  case  of  disability,  receiving  one- 
half  the  average  salary  for  the  five  years  before  retirement. 


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MUNICIPAL  PENSION  SYSTEMS 


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272  INDUSTRIAL  INSURANCE 

The  minimum  annuity  is  $250  and  the  maximum  $600.  No 
teacher  can  be  retired  under  these  legal  provisions  unless  he 
or  she  shall  have  first  paid  into  the  fund  such  sum  as  shall 
make  his  or  her  total  payments  into  said  fund  equal  to  at 
least  20  per  cent,  of  his  or  her  average  annual  salary  for  the 
five  years  immediately  preceding  the  time  of  retirement. 
The  fund  is  maintained  by  deductions  from  salaries,  i  per 
cent,  of  annuities,  gifts,  legacies,  and  interest  on  investments 
of  the  funds. 

In  1895  a  law  was  enacted  in  California  (amended  in 
1897  and  in  1901)  to  create  a  public-school  teachers'  annuity 
and  retirement  fund  in  the  cities  and  counties  of  the  state. 
Teachers  become  contributors  and  beneficiaries  by  signing 
a  contract  and  paying  dues.  The  benefits  accrue  to  members 
who  have  served  30  years  in  the  schools  of  the  state. 

The  tendency  of  a  system  of  pensions  and  sickness  insur- 
ance is  to  lengthen  the  period  of  service,  and  thus  to  increase 
the  number  of  teachers  who  have  a  strong  professional 
spirit  and  who  have  time  to  give  the  community  the  advan- 
tage of  long  experience.  At  the  same  time  it  is  easier  to 
remove  from  the  service  those  who  are  too  old  and  feeble  to 
be  efficient  without  inhumanity.  But  such  pensions  ought 
not  to  be  paid  out  of  the  meager  salaries  even  now  too  low ; 
they  should  be  supported  from  taxation,  only  those  receiving 
over  $1,000  being  required  to  contribute  and  having  higher 
rates  of  pensions  on  this  account. 


CHAPTER  X 

THE  PENSION  SYSTEMS  OF  THE  UNION  AND  OF  THE 
SEVERAL  STATES 

The  federal  government. — This  system  is  instructive  in 
relation  to  workingmen's  insurance  both  as  a  precedent  and 
as  a  warning.  The  costly  errors  committed  in  its  founda- 
tion and  administration  will  warn  the  future  legislator  to 
prepare  carefully  and  scientifically  in  advance  a  consistent 
and  reasonable  plan.  The  pension  idea  itself,  in  spite  of 
faults  of  law  and  administration,  has  already  prepared  the 
way  for  insurance  of  old  age  for  wage  earners.  From  the 
beginning  of  our  history  as  a  people  the  pension  method  of 
caring  for  servants  of  the  community  has  been  familiar. 
The  earliest  settlers  of  New  England  adopted  the  principle 
that  it  was  both  the  duty  and  the  interest  of  the  common- 
wealth to  provide  pensions  for  those  who  risk  their  lives  in 
war  for  the  defense  of  all. 

In  1636  the  Plymouth  Pilgrims  enacted  a  regulation  that  whosoever 
should  set  forth  as  a  soldier  and  return  maimed  should  be  maintained 
by  the  colony  for  the  rest  of  his  life.  The  Virginia  Assembly  of 
1644  passed  a  law  providing  pensions  for  disabilities.  Our  first  real 
pension  law  was  passed  by  the  Continental  Congress,  August  26,  1776. 

The  central  and  state  governments  thus  sought  to  en- 
courage enlistments  in  times  of  national  danger. 

With  the  beginning  of  the  Civil  War  pensions  there  is  noted 
increasing  liberality  in  conducting  pension  affairs.  Up  to  1879  a  man, 
to  be  eligible  for  a  pension,  must  have  applied  within  five  years  after 
his  discharge.  The  Arrears  Pension  Act  of  1879  is  one  of  the  most 
noted  of  our  pension  laws.  It  provided  that  all  pensions  which  had 
been  granted  under  the  general  laws  regulating  pensions  should  com- 
mence from  the  date  of  the  discharge  of  the  person  on  whose  account 
the  pension  had  been  granted.  The  rate  of  the  pension  for  the  inter- 

273 


274  INDUSTRIAL  INSURANCE 

vening  time  from  which  the  pension  had  been  granted  was  to  be  the 
same  as  that  for  which  the  pension  had  been  originally  granted.1 

From  this  time  the  sums  expended  rapidly  increased. 
Military  land  grants. — Ever  since  the  War  of  the  Revo- 
lution the  government  has  given  land  freely  to  veterans  of 
the  wars.  In  addition  to  grants  made  by  special  acts  of 
Congress  the  government  has  issued  since  the  war  for  inde- 
pendence 598,628  warrants  for  783,030  acres  (Rep.  Com. 
of  Pensions,  1906,  p.  10). 

In  this  connection  we  must  compare  the  expenditures 
for  pensions  in  this  country  and  in  Europe.  It  is  true  that 
we  have  no  industrial  insurance  systems,  but  we  give  to  a 
large  number  of  superannuated  workers  a  vast  sum  in  the 
form  of  veteran  pensions.  In  the  year  1891  Great  Britain 
expended  on  military  pensions  £5,410,822,  less  than  $27,- 
054,000;  France,  $29,857,000;  Germany,  $13,283,000;  Aus- 
tria, $12,245,000.  The  expenditures  of  the  United  States 
for  the  same  purpose  in  that  year  were  $11 8,548,959^  The 
disbursements  for  pensions  by  the  United  States  from  July 
I,  1790,  to  June  30,  1906,  were  $3,459,860,311. 23. 3  The 
amounts  paid  for  the  fiscal  year  1905-6  were  as  follows : 
Regular  Army  and  Navy  (invalids,  widows  and 

dependents)     $    2,521,802.10 

Civil  War,  general  law   56,789,837.93 

Civil  War,  Act  of  1870  74,010,063.41 

War  with  Spain   3,442,156.53 

War  of  1812   101,278.27 

War  with  Mexico   1,376,396.36 

Indian  wars    622,874.85 

Treasury   settlements    135,878.80 


$139,000,288.25 
Adding  expenses  of  administration,  total   139,881,726.85 

1  Butler,  in  N.  C.  C.,  1906. 
2 Forum,  Vol.  XII,  p.  426. 
'Report  of  Commissioner  of  Pensions,  1906,  p.  u. 


PENSION  SYSTEMS  OF  THE  UNION  275 

The  total  number  of  pensioners  on  the  rolls  June  30, 
1906,  was  985,971.  The  highest  number  of  pensioners  at 
one  time  was  $1,004,196,  on  January  31,  1905.  As  the 
veterans  are  growing  old  and  feeble  the  rate  of  mortality 
is  high  and  the  cost  will  rapidly  decrease.  Evils  and  abuses 
have  been  inevitable.  For  many  years  since  the  Civil  War 
the  nation  has  grown  rapidly  in  wealth ;  the  systems  of  tariffs 
on  imports  may  have  reduced  the  income  of  multitudes  of 
consumers  but  along  with  the  taxes  on  internal  revenue 
objects,  as  alcoholic  liquor  and  tobacco,  have  yielded  the 
federal  government  an  income  sufficient  to  meet  the  ex- 
penses of  military  and  civil  service,  to  reduce  the  national 
debt  to  small  proportions,  and  to  produce  an  enormous  sur- 
plus which  has  been  a  constant  temptation  to  extravagance. 
Under  these  circumstances  the  veterans  and  their  friends, 
with  the  aid  of  political  pressure,  have  been  able  to  secure 
from  Congress  such  liberal  laws  as  the  civilized  world  cannot 
elsewhere  show.  As  the  manufacturers  have  desired  to  re- 
tain the  high  tariffs  on  imports  as  a  protective  measure  they 
had  to  find  a  way,  or  many  ways,  to  spend  the  surplus,  and 
the  soldiers  could  easily  appeal  to  patriotic  sentiment  in  ask- 
ing generous  pensions. 

Homes  for  disabled  volunteer  soldiers. — In  addition  to 
their  pensions,  which  may  be  used  for  the  personal  care  and 
enjoyment  of  the  men  or  for  the  support  of  their  families, 
the  disabled  volunteer  soldiers  have  the  use  until  death  of 
some  one  of  the  homes  provided  by  the  nation  or  by  one  of 
the  states.  The  grounds  of  these  homes  are  made  attractive 
and  are  visited  by  many  people  on  account  of  their  beauty. 
The  inmates  are  well  fed,  comfortably  clothed  in  army  uni- 
forms, and  receive  the  best  medical  care.  Theatrical, 
musical,  and  literary  entertainments  are  provided  without 
charge,  and  chaplains  conduct  religious  services.  During 
the  year  ending  June  30,  1905,  34,053  members  were  shel- 


276  INDUSTRIAL  INSURANCE 

tered  in  the  national  and  19,677  in  30  state  homes;  a  total 
of  53,730,  an  increase  of  1,879  over  tne  preceding  year.4 

The  expenditures  for  1905  of  the  ten  branches  of  the 
National  Home  were  $3,343,696.67;  the  average  annual 
cost  per  person  was  $157.76;  the  average  age  of  those  who 
served  in  the  Mexican  and  Civil  Wars,  66.26  years ;  of  the 
Spanish  War,  37.56  years.  The  34,053  persons  received 
pensions  to  the  amount  of  $3,454,752.58  in  charge  of  the 
superintendents;  an  average  of  $122.82,  of  which  $786,- 
369.45  was  paid  to  families  and  $2,624,419.53  to  the  pen- 
sioners themselves.  The  amount  paid  to  state  homes  was 
$1,138,879.87.  The  state  homes  are  inspected  by  officers 
of  the  National  Home  and  reports  are  made  to  the  board  on 
their  condition  and  management.  The  percentage  of  deaths 
to  the  whole  number  cared  for  rose  from  0.655  'm  1867  to 
6.351  in  1905.  Of  the  34,053  in  the  National  Home  12,- 
374  had  wives  living,  or  minor  children,  or  both,  and 
21,679  were  single.  The  National  Home  owns  5,308.50 
acres  of  land,  valued  at  $345,231.51,  and  buildings  valued 
at  $9,401,651.68;  total  $9,746,883.19.  The  budget  calls 
for  $5,208,844  for  1907. 

How  far  do  these  military  pensions  act  as  pensions  for 
workingmen?  On  this  point  it  is  difficult  to  secure  exact 
information.  Most  of  the  present  pensioners  went  into  the 
army  as  volunteer  soldiers  when  they  were  quite  young,  and 
immediately  after  the  wars  returned  to  their  ordinary  vo- 
cations, if  they  were  not  too  much  enfeebled  by  disease  or 
crippled  by  wounds.  They  came  from  all  forms  of  industry. 
In  appointments  to  civil  positions  the  veterans  have  always 
been  favored.  Since  the  great  majority  of  the  old  soldiers 
came  from  manual  occupations,  it  seems  fair  to  presume  that 

'Laws  and  Regulations,  National  Home  for  Disabled  Volunteer 
Soldiers,  1906;  Report  of  the  Board  of  Managers  of  the  National  Home 
for  Disabled  Volunteer  Soldiers,  1906. 


PENSION  SYSTEMS  OF  THE  UNION  277 

the  military  pension  system  has  acted  in  great  measure  as 
a  workingmen's  pension  system.  Many  of  the  old  men  and 
women  who,  in  Europe,  would  be  in  almshouses  are  found 
in  the  United  States  living  upon  pensions  with  their  children 
or  in  homes  to  which  paupers  are  not  sent,  and  they  feel 
themselves  to  be  the  honored  guests  of  the  nation  for  which 
they  gave  the  last  full  measure  of  devotion." 

The  extravagance  and  abuses  of  this  military  pension 
system  have  probably  awakened  prejudice  against  working- 
men's  pensions.  The  most  severe  criticism  is  based  on  the 
moral  effects  of  having  a  secure  income  without  saving  or 
labor.  Unquestionably  some  of  the  old  soldiers  have  per- 
mitted themselves  to  live  in  idleness  and  vice  because  they 
were  satisfied  with  a  petty  pension;  just  as  numerous  chil- 
dren of  rich  men  are  deprived  of  motive  to  struggle  by  the 
prospect  of  falling  heir  to  wealth  for  which  they  render  no 
equivalent.  But  most  of  the  veterans  did  not  thus  ignobly 
decay  in  idleness.  The  vast  majority  of  them  returned  to 
their  occupations  and  made  the  most  of  the  favorable  oppor- 
tunities. Many  were  mutilated  or  enfeebled  and  so  could 
not  find  and  retain  positions  in  competition  with  stronger 
men.  Their  idleness  was  enforced.  The  argument  from 
occasional  abuses  does  not  go  far.  Rich  men  continue  to 
prepare  fortunes  for  their  children,  although  they  are  often 
enough  reminded  of  the  danger,  and  children  rarely  refuse 
to  accept  legacies  because  of  the  moral  perils.  Our  nation 
will  never  retreat  from  its  liberal  policy  toward  the  brave 
defenders  of  its  life  merely  because  a  few  will  pervert  its 
gifts.  Old-age  industrial  pensions  are  offered  by  many 
intelligent  employers  precisely  because  they  tend  to  foster 
economic  virtues,  and  surely  this  system  would  not  produce 
an  opposite  effect  by  being  made  universal.  If  workmen 
contribute  to  the  fund  their  thrift  is  cultivated.  All  depends 
on  the  wisdom  of  the  method. 


278  INDUSTRIAL  INSURANCE 

Other  federal  pensions. — By  the  act  of  Congress  of 
August  5,  1892,  all  women  employed  by  the  surgeon-general 
of  the  army  as  nurses  during  the  Civil  War,  for  a  period  of 
six  months  or  more,  and  who  were  honorably  relieved  from 
such  service,  are  granted  a  pension,  provided  they  are  unable 
to  earn  their  own  support.  Under  this  law  there  were  624 
pensioners  in  the  year  ending  June  30,  1902. 

Life-saving  service. — The  only  law  providing  relief  in 
the  nature  of  pensions  in  the  life-saving  service  is  that  con- 
tained in  sects.  7  and  8  of  the  act  of  Congress,  approved  May 
4,  1882.  This  provides  that  if  any  keeper  or  member  of  a 
life-saving  or  life-boat  station  shall  be  disabled  by  reason 
of  any  wound  or  injury  received  or  disease  contracted  in 
the  life-saving  service  in  the  line  of  duty,  he  shall  be  con- 
tinued on  the  rolls  of  service  at  full  pay  for  a  period  under 
no  circumstance  greater  than  two  years.  A  bill  to  provide 
for  the  retirement  of  and  for  pensions  to  those  engaged  in 
the  life-saving  work  was  introduced  in  both  houses  of 
Congress  during  the  58th  session,  but  failed  to  pass  on  a 
tie  vote.  President  Roosevelt  has  shown  his  interest  in 
insurance  of  workers  in  many  ways,  and  his  message  of 
December  5,  1905,  contains  an  argument  not  only  for 
members  of  a  particular  service  but  for  all  workers  on  small 
pay: 

I  call  your  especial  attention  to  the  desirability  of  giving  to  the 
members  of  the  life-saving  service  pensions  such  as  are  given  to  fire- 
men and  policemen  in  all  our  great  cities.  The  men  in  the  life- 
saving  service  continually  and  in  the  most  matter-of-fact  way  do  deeds 
such  as  make  Americans  proud  of  their  country.  They  have  no 
political  influence,  and  they  live  in  such  remote  places  that  the  really 
heroic  services  they  continually  render  receive  the  scantiest  recog- 
nition from  the  public.  It  is  unjust  for  a  nation  like  this  to  permit 
these  men  to  become  totally  disabled  or  to  meet  death  in  the  per- 
formance of  their  hazardous  duty  and  yet  to  give  them  no  sort  of 
reward.  If  one  of  them  serves  30  years  of  his  life  in  such  a  position  he 


PENSION  SYSTEMS  OF  THE  UNION  279 

should  surely  be  entitled  to  retire  on  half  pay,  as  a  fireman  or  police- 
man does;  if  he  becomes  totally  incapacitated  through  accident  or 
sickness  or  loses  his  health  in  the  discharge  of  his  duty  he  or  his 
family  should  receive  a  pension  just  as  any  soldier  should.  I  call  your 
attention  with  especial  earnestness  to  the  matter  because  it  appeals 
not  only  to  our  judgment  but  to  our  sympathy,  for  the  people  on 
whose  behalf  I  ask  it  are  comparatively  few  in  number,  render  incalcul- 
able service  of  a  particularly  dangerous  kind,  and  have  no  one  to 
speak  for  them. 

Civil  service  pensions. — This  subject  has  been  long  dis- 
cussed in  the  national  legislature.  In  the  year  1898  a  bill 
was  offered  in  Congress  which  was  intended  to  provide  a 
pension  system  for  all  civil  servants  of  the  federal  govern- 
ment. Under  this  plan  2  per  cent,  of  the  monthly  salary  was 
to  be  retained  and  invested  by  the  Secretary  of  the  Treasury. 
Four  years  after  the  first  payments  were  made,  retirements 
were  to  begin  with  life  annuities  of  75  per  cent,  of  the  high- 
est pay  at  any  time  received  by  the  retiring  employee.  Re- 
tirements after  2O-years'  service  were  to  be  either  voluntary 
or  compulsory;  voluntary  after  60  years  of  age  and  25 
years'  service,  compulsory  after  70  years  of  age  and  35 
years'  service.  The  Civil  Service  Commission  was  to  act  as 
the  retiring  board.  Opinion  has  been  divided  as  to  the  wis- 
dom and  fairness  of  this  legislation.  Advocates  of  the 
measure  claim  that  experience  in  older  countries  teaches 
that  the  service  would  be  improved  because  the  employees 
could  give  themselves  to  their  duties  and  could  be  dismissed 
without  inhumanity  when  their  power  to  work  becomes  too 
feeble  for  efficiency.  Mr.  Frank  A.  Vanderlip,  who  has 
had  experience  in  high  positions  at  Washington  and  is  a 
banker  of  distinction,  has  thus  expressed  the  argument  in 
favor  of  civil  pensions : 

With  the  exception  of  the  United  States,  all  the  great  powers  of 
the  civilized  world  pension  their  civil  servants.  The  question  of  civil 
pensions  in  the  United  States  is  one  which  deserves  serious  considera- 


280  INDUSTRIAL  INSURANCE 

tion.  The  full  working  out  of  the  merit  system  can  never  be  accom- 
plished until  we  recognize  the  principle  of  a  pension  for  super- 
annuated government  employees.  It  is  doubtful  if  there  are  any  men 
who  have  ever  been  charged  with  the  responsibility  of  an  appointive 
office  in  the  government  service  who  have  not  come  to  recognize  that 
need,  and  who  have  not  been  won  over  to  the  belief  that  it  would  be 
an  economy  in  government  administration  if  a  proper  system  of  civil 
pensions  were  devised.5 

The  widows  of  the  presidents  of  the  nation  have  been 
pensioned  by  special  acts  of  Congress.  The  widows  of  the 
following  have  been  thus  pensioned :  James  Monroe  ( 1836), 
Abraham  Lincoln,  James  K.  Polk,  James  A.  Garfield, 
Ulysses  S.  Grant,  and  William  McKinley.  Since  these  pen- 
sions were  intended  by  the  nation  to  mark  a  signal  honor  it 
can  hardly  be  claimed  hereafter  that  equitable  pensions  to 
workingmen,  based  on  life  service  in  productive  toil,  and 
on  their  own  contribution  to  the  fund,  can  be  considered 
unworthy  or  pauperizing. 

Southern  states. — The  subject  would  not  be  complete 
without  mention  of  the  pension  systems  of  the  southern 
states  provided  for  the  veteran  Confederate  soldiers.  It 
was  manifestly  impossible  after  the  Civil  War  to  provide  at 
national  expense  pensions  for  those  who  had  taken  active 
part  in  an  armed  attempt  to  destroy  the  Union.  But  it  was 
entirely  proper  for  the  individual  states  to  make  honorable 
provision  for  those  who  had  enlisted  at  the  command  of 
those  states.  Naturally  the  pensions  voted  by  the  im- 
poverished states  have  been  modest  in  amount  and  have 
probably  been  more  economically  administered  than  the 
national  pensions.  Let  Professor  Glasson,  an  intelligent 
son  of  the  South,6  who  has  given  special  study  to  pensions, 
tell  the  facts  and  interpret  them  in  his  own  way : 

6  North  American  Review,  December,    1905,  pp.   928,   929. 
6  See  article  by  Professor  William  H.  Glasson,  in  Review  of  Reviews, 
July,   1907,  pp.  40  ff. ;  cf.  A.  W.  Butler,  N.  C.  C.,  1906. 


PENSION  SYSTEMS  OF  THE  UNION  281 

CONFEDERATE   SOLDIERS'    HOMES 

Not  only  has  the  South  memorials  and  sentiment  for  the  Con- 
federate dead,  but  also  practical  and  generous  care  for  the  living. 
Everywhere  aid  is  being  extended  to  the  surviving  soldiers  who  are 
without  means  in  their  declining  days.  To  relieve  them  from  the 
stigma  of  depending  upon  charity  and  poor  relief,  liberal  provision 
of  soldiers'  homes  and  of  pensions  has  been  made.  Homes  for  aged 
and  infirm  Confederate  soldiers  are  maintained  by  nearly  all  of  the 
Southern  States.  These  are  of  a  similar  usefulness — though  neces- 
sarily conducted  on  a  much  smaller  scale — to  that  of  the  homes  for 
Union  soldiers  supported  by  the  national  government.  An  illustration 
of  their  work  is  found  in  the  Jefferson  Davis  Memorial  Home  estab- 
lished in  1904  by  the  State  of  Mississippi  at  Beauvoir,  the  old  home  of 
the  Confederate  President.  Up  to  January  I,  1906,  in  persons  had 
entered  this  home,  101  being  veterans,  nine  wives  of  veterans,  and 
two  widows.  Their  average  age  at  the  date  of  admission  was  about 
seventy-one  years.  In  the  two  years,  there  were  twenty-one  deaths, 
at  an  average  age  of  seventy-three  and  one-third  years.  The  Missis- 
sippi Division,  United  Daughters  of  the  Confederacy,  aided  in  inaugu- 
rating the  home  by  providing  the  funds  for  the  erection  and  fur- 
nishing of  four  buildings.  The  amount  expended  for  the  home  in 
1906  was  nearly  $28,000.  In  connection  with  it,  a  hospital  for  the 
treatment  of  invalid  soldiers  has  just  been  erected. 

North  Carolina  maintains  a  home  for  Confederate  soldiers  at 
Raleigh.  The  number  of  inmates  in  1906  was  150,  and  $15,000  was 
appropriated  for  maintenance  and  $5,ooo  for  improvements.  In 
Arkansas,  the  home  has  from  eighty  to  eighty-five  inmates,  and  for 
the  two  years,  1905  and  1906,  there  was  expended  in  its  support 
$37.850.  Texas,  in  1906,  expended  $86,000  for  the  support  of  a  home 
containing  320  to  340  inmates.  Virginia  expended  $35,000  for  her 
soldiers'  home  in  1906.  Florida  maintains  a  home  at  Jacksonville. 
Similar  work  is  being  done  by  Georgia,  Tennessee,  Alabama,  and 
other  states. 

CONFEDERATE   PENSIONS 

But  the  most  substantial  provision  which  the  South  has  made  for 
the  veterans  is  that  of  pensions.  The  circumstances  under  which  a 
Confederate  pension  system  has  been  inaugurated  in  every  Southern 
State  are  especially  calculated  to  show  the  practical  devotion  of  the 
South  to  the  cause.  After  the  war  and  the  period  of  reconstruction, 
the  South  was  ravished  and  exhausted.  But  with  the  first  returning 


282  INDUSTRIAL  INSURANCE 

conditions  of  prosperity,  thought  was  turned  toward  making  pro- 
vision for  the  needy  and  impoverished  Confederate  soldiers.  Though 
the  South  was  paying  tens  of  millions  in  indirect  taxation  to  the 
national  government  which  was  expended  in  pensions  to  Union  soldiers, 
she  did  not  hesitate  to  make  her  burden  a  double  one.  The  payment 
of  pensions  to  invalid  Union  soldiers  was  very  generally  accepted  as 
one  of  the  results  of  the  war.  But  such  acts  as  that  of  1890,  under 
which  vast  sums  have  been  paid  out  to  former  Union  soldiers  who 
received  no  disability  in  war  and  who  are  perfectly  able  to  support 
themselves  in  comfort,  and  often  in  luxury,  have  certainly  worked  a 
grave  injustice  to  the  South.  In  so  far  as  the  national  pension  system 
has  come  to  be  a  means  of  distributing  surplus  revenue  throughout 
the  country,  it  has  surely  been  exceedingly  inequitable  to  the  South. 
But  her  comparative  poverty  and  the  unjustly  large  sums  taken  from 
her  for  the  national  pension  system  have  not  deterred  the  States  of 
the  South  from  one  after  another  inaugurating  Confederate  pension 
systems.  And  the  money  for  these  pension  systems  has  not  been 
raised  by  indirect  taxation  as  are  the  revenues  of  the  federal  Govern- 
ment. Southerners  have  voted  pensions,  liberal  for  their  means,  when 
the  pension  tax  appeared  on  the  face  of  every  man's  tax  bill.  Will- 
ingness to  vote  pensions  and  constantly  increase  them  under  those 
circumstances  indicates  a  popular  and  deliberate  approval  of  the 
expenditure  and  a  desire  to  make  it,  even  on  pain  of  doing  without 
much  needed  improvements  in  schools,  roads  and  other  public  institu- 
tions. 

THE  GEORGIA   PENSION   SYSTEM 

Georgia  is  the  Southern  State  which  has  the  most  liberal  and  com- 
prehensive pension  system.  From  1878  up  to  and  including  1906  she 
has  expended  for  this  purpose  $10,275,000,  and  her  annual  expenditure 
is  now  between  $900,000  and  $1,000,000,  a  great  annual  sum  for  a 
single  State  of  the  South.  Since  1896  she  has  had  at  the  head  of  her 
system  a  commissioner  of  pensions  appointed  by  the  governor,  and 
the  development  of  her  system  has  been  in  many  respects,  though  on 
a  smaller  scale,  similar  to  that  of  the  national  system.  She  began  by 
expending,  in  1879,  $70,580  for  artificial  limbs  for  disabled  Confeder- 
ates. In  1889  she  began  paying  regular  pensions  to  disabled  and 
diseased  veterans.  Pension  provision  was  made  in  1893  for  the 
widows  of  Confederate  soldiers  whose  husbands  died  in  service,  or 
after  the  war  from  disability  or  disease  contracted  in  service.  In 
1896  indigent  Confederate  soldiers  were  admitted  to  her  pension  list. 


PENSION  SYSTEMS  OF  THE  UNION 


283 


In  1902  a  further  extension  of  the  pension  laws  was  made  for  the 
benefit  of  indigent  widows  of  Confederate  soldiers,  though  the  soldier's 
death  had  no  connection  with  military  service.  The  following  table 
shows  the  number  of  each  class  and  the  amount  paid  in  1906 : 


Number 

Amount  Paid 

Disabled  soldiers          

2,8^3 

SlCQ  QCQ 

Widows  (death  of  husband  of  service  origin)  
Indigent  soldiers     

2,551 
7,734 

151,228 
4.63,080 

2,2IO 

132,<8o 

Totals.., 

1=1,207 

$007,747 

There  may  be  some  interest  attaching  to  a  comparison  of  the 
annual  amounts  paid  by  Georgia  to  Confederate  pensioners  having 
certain  specific  injuries  incurred  in  military  service  with  the  amounts 
paid  by  the  National  Government  to  Union  soldiers  with  similar  disa- 
bilities resulting  from  actual  military  service: 


Georgia  Con- 
federate 

Federal 

For  total  loss  of  sight  

$I<O 

$l  200 

For  loss  of  sight  of  one  eye  

3O 

144 

For  total  loss  of  hearing  

3O 

480 

For  loss  of  a  hand  

IOO 

360 

For  loss  of  both  hands  or  feet  

I  ro 

I  2OO 

For  total  disability  in  one  arm  

to 

432 

For  incapacity  to  perform  manual  labor 

CQ 

760 

For  loss  of  a  thumb  

J^ 
(T 

jvv 
06 

For  loss  of  little  finger  or  little  toe  

q 

24 

For  loss  of  four  fingers 

2O 

IO2 

To  indigent  Confederate  soldiers  who  served  at  least  six  months 
during  the  Civil  War  Georgia  allows  $60  a  year.  Indigent  widows 
of  such  soldiers  also  receive  the  same  amount,  as  do  also  the  widows 
of  soldiers  who  died  in  the  military  service  of  the  Confederate  States, 
or  from  causes  originating  in  that  service. 

It  is  a  matter  of  great  regret  that,  like  the  federal  system,  the 
Confederate  pension  system  of  Georgia  has  been  subject  to  abuses. 
From  time  to  time  these  have  been  attacked  in  the  newspaper  press 
of  the  state.  In  1902  the  Georgia  commissioner  of  pensions  wrote  in 
his  report:  "The  pension  rolls,  under  existing  laws,  are  being  bur- 
dened with  men  who  never  saw  the  enemy,  and,  in  many  instances, 


284 


INDUSTRIAL  INSURANCE 


deserters.  To  allow  such  is  a  disgrace  to  the  soldier  and  the  state, 
and  it  is  fastening  upon  the  state  a  class  of  unworthy  beneficiaries." 
On  a  smaller  scale,  the  abuses  that  have  sprung  up  in  Georgia  are 
exactly  similar  to  those  which  have  characterized  the  national  system. 
For  one  who  is  acquainted  with  the  history  of  the  national  system,  to 
read  of  them  is  but  the  repetition  of  a  sad  but  familiar  story.  Occa- 
sionally, complaints  of  the  abuse  of  the  pension  system  are  heard  in 
other  southern  states  than  Georgia.  A  newspaper  of  North  Carolina 
a  few  years  ago  reported  the  state  auditor  as  saying  that  the  county 

The  following  table  exhibits  the  growth  of  the  Georgia  pension  list: 


Number 

Amount  Paid 

1870  (for  artificial  limbs) 

i  888 

$7O  ^80 

1887  (for  artificial  limbs) 

I  I7O 

CO   TQC 

1880  . 

2,004 

I^8,7QO 

j.wuy. 
l8OO 

9    Q?8 

183  d.1  ^ 

180? 

7  308 

4.26  34.O 

J>**yj)  

IQOO 

II  <^8 

678  100 

IOCX 

I"\  06  < 

go  -}  060 

1006 

I  ^  207 

QO7  74.7 

of  Burke  paid  to  the  state  something  over  $4,000  in  taxes  and  received 
over  $5,000  in  Confederate  pensions.  The  county  had  at  that  time 
254  pensioners,  and  the  county  pension  board  had  sent  in  at  least  100 
more  approved  applications  than  were  approved  by  the  State  Pension 
Board.  Complaint  was  made  that  the  disposition  of  a  number  of  the 
county  boards  was  to  approve  all  the  applications  which  came  in,  and 
that  doctors  were  to  be  found  who  would  give  certificates  of  the 
required  disability. 

PENSIONS   IN   OTHER   SOUTHERN    STATES 

In  1906  Alabama  disbursed  $462,732  to  15,147  Confederate  pen- 
sioners. The  pensioners  of  that  state  were  divided  into  four  classes, 
receiving  respectively  $60,  $50,  $40,  and  $30.  There  were  127  of  the 
first  class,  142  of  the  second  class,  168  of  the  third  class,  and  14,710 
of  the  fourth  class.  The  first  class  consists  of  those  who  are  blind 
or  have  lost  two  limbs.  Soldiers  whose  disability  is  not  so  serious 
are  in  the  second,  third,  and  fourth  classes.  Widows  are  in  the  fourth 
class.  The  system  has  grown  so  important  that  the  state  auditor, 
from  whose  office  it  is  administered,  recommends  the  creation  of 
the  office  of  pension  commissioner. 


PENSION  SYSTEMS  OF  THE  UNION 


285 


Texas  had  8,103  Confederate  pensioners  in  1906,  of  whom  approxi- 
mately one-third  were  widows.  She  expended  for  them  in  that  year 
$425,000.  Her  appropriation  for  pensions  for  the  year  ending  August 
31,  1907,  is  $500,000.  Louisiana  provides  artificial  limbs  for  Confeder- 
ate veterans  in  need  of  them.  Her  pension  system  is  administered  by 
a  State  Board  of  Pension  Commissioners.  On  February  15,  1906,  she 
had  1,925  pensioners,  for  whom  the  annual  appropriation  was  $75,000 
North  Carolina,  in  1906,  had  14,400  Confederate  pensioners  on  the 
roll,  of  whom  4,500  were  widows.  Her  appropriation  for  pensions 
in  that  year  was  $275,000,  but  was  increased  to  $400,000  for  1907.  The 
pension  roll  of  Arkansas  was  made  up  of  7,340  pensioners  in  1906, 
and  about  2,650  were  widows.  The  amount  distributed  to  these  pen- 
sioners was  $284,000. 

Tennessee  has  an  invalid-pension  law  which  divides  the  disabled 
soldiers  into  five  classes,  according  to  the  nature  of  the  disability. 
The  amounts  paid  range  from  $300  per  year  for  such  injuries  as  the 
loss  of  both  arms  or  legs  to  $60  per  year  for  minor  disabilities. 
There  are  now  on  her  roll  3,899  of  these  invalid  pensioners,  at  an 
annual  cost  of  $290,000.  She  also  provides  pensions  for  widows  of 
soldiers  in  two  classes  at  $72  and  $60  per  year^  There  are  now  1,025 
of  such  pensioners,  requiring  an  annual  expenditure  of  about  $65,000. 
The  state  now  appropriates  for  its  pension  system  $375,000  a  year. 

The  pension  system  of  Mississippi  provides  for  soldiers  and  sailors, 
their  widows  and  servants.  About  $250,000  was  paid  to  7,863  pen- 
sioners in  1906.  The  maximum  amount  paid  to  a  pensioner  was  $125 
and  the  minimum  amount  $28.30.  Six  classes  of  pensioners  are  pro- 
vided for  by  the  law,  and  the  amounts  paid  were  as  follows: 


Number 

Amount  Paid 

First  class 

114. 

$14  2^O 

Second  class                     

T.1& 

2C    -3  CQ 

Third  class                       

14. 

I  (XO 

Fourth  class          

376o 

1  06  408 

Fifth  class     

4.^7 

12  033 

Sixth  class  .    . 

3  180 

80  004. 

Totals  

7  863 

$24.0  OS"? 

Virginia,  Florida,  and  South  Carolina  also  have  Confederate  pen- 
sion systems,  for  which  they  appropriate  in  the  aggregate  hundreds  of 
thousands  of  dollars  annually.  In  1906  Virginia's  appropriation  was 
$346,000.  Florida  had  about  3,200  pensioners  on  the  roll  in  1906  and 


286  INDUSTRIAL  INSURANCE 

paid  out  in  that  year  $294,000.  Under  the  new  Florida  law  pensions 
range  from  $100  to  $150.  South  Carolina  had  7,750  pensions  in  the 
same  year  and  expended  $198,000.  Later  information  would  probably 
show  considerable  increase  in  number  of  pensioners  and  in  amounts 
appropriated  in  all  of  these  States. 

Thus  it  has  been  shown  that  throughout  the  South  the  states  are 
loyal  to  the  surviving  Confederate  veterans,  not  as  a  matter  of  senti- 
ment alone,  but  that  the  loyalty  has  taken  the  very  practical  form  of 
a  loosening  of  purse-strings.  Their  generosity  may  occasionally  be 
abused,  but,  notwithstanding  this  fact,  the  abuses  by  the  unworthy  few 
are  not  allowed  to  lessen  the  care  for  the  worthy  majority,  and,  with 
increasing  prosperity,  ever  increasing  liberality  to  the  Confederate 
veterans  receives  the  sanction  of  public  opinion  in  all  of  the  states 
that  seceded  from  the  Union  in  1861. 

Conclusions. — The  result  of  this  study  of  government 
pensions  is  that  the  federal  and  state  governments  have 
already  accepted  and  acted  upon  the  principle,  to  which 
they  are  fully  committed,  that  those  who  have  served  the 
country  in  times  of  war  shall  be  honorably  provided  for, 
without  necessity  of  begging  charity,  during  the  period  of 
invalidism  and  old  age.  In  fact  this  is  insurance  for  entire 
or  partial  disability  caused  by  injury  or  disease  in  the  service 
of  the  nation.  On  a  similar  ground  rests  the  argument  for 
pensions  to  men  disabled  in  the  dangerous  life-saving  ser- 
vice. For  reasons  of  a  different  character  the  idea  of  pen- 
sions for  civil  servants  of  the  nation  has  gained  ground. 
The  argument  here  rests  chiefly  on  the  fact  that  a  pension 
will  secure  a  higher  order  of  service  at  less  cost  and  also 
spare  the  people  the  humiliating  spectacle  of  lifelong  and 
faithful  servants  of  a  powerful  and  prosperous  land  begging 
their  bread  in  invalidism  and  old  age.  But  all  these  argu- 
ments apply  with  very  great  force  to  laboring  men ;  and  the 
logic  of  the  national  conduct  leads  straight  toward  a  uni- 
versal system  of  provision  for  disability  due  to  sickness, 
accident,  invalidism,  old  age,  and  death.  It  is  for  this 


PENSION  SYSTEMS  OF  THE  UNION  287 

reason  that  the  facts  cited  in  this  chapter  are  so  full  of  sig- 
nificance in  a  discussion  of  industrial  insurance.7 

7  Enemies  of  compulsory  insurance  (which  should  rather  be  called,  as 
in  France,  "social  insurance,")  seek  to  obstruct  its  progress  by  calling  it  a 
form  of  poor  relief,  a  "charity ;"  and  they  deny  it  a  place  under  the  head 
of  "insurance"  because  the  beneficiaries  do  not  pay  all  the  premiums. 
The  argument  has  no  force,  for  the  principle  of  insurance  against  a  risk 
is  unaffected  by  the  fact  that  the  person  insured  does  not  pay  the 
premium.  A  man's  relations  may  pay  his  life-  or  accident-insurance 
premium ;  he  is  insured.  Thus  one  of  the  highest  authorities  in  the  field 
says :  "By  insurance  we  understand  an  arrangement  resting  on  mutuality 
for  the  purpose  of  making  up  loss  of  property  through  various  chances 

which   may   be    calculated Sometimes   the   beneficiaries    receive    on 

the  basis  of  their  own  premium  payments  an  additional  sum  from  the 
payments  of  others.  This  fact  does  not  take  away  from  the  arrange- 
ments its  character  as  insurance Social  insurance  must  be  con- 
ceived of  as  insurance." — Alfred  Manes,  Versicherungswesen,  pp.  2,  15. 


CHAPTER  XI 

PROTECTIVE  LEGISLATION 

The  employers'  liability  law,  which  has  already  been 
discussed,  has  been  pressed  as  far  as  possible  on  the  ground 
that  it  would  tend  to  compel  the  employers  to  use  devices 
for  protecting  workmen  from  accident  by  inflicting  on  them 
heavy  damages  in  cases  where  injury  could  be  traced  to 
their  negligence.  Probably  this  law  has  had  some  influence 
in  this  direction,  but  how  much  it  would  be  impossible  to 
estimate.  Such  legal  measures  have  limited  influence  for 
several  reasons:  (i)  In  the  absence  of  a  definite  protective 
code  the  courts  have  no  exact  standard  for  measuring  and 
fixing  the  degree  of  neglect  of  employers,  and  the  employees 
themselves  have  no  clear  statement  of  their  rights.  Without 
factory  inspection  and  particular  requirements  of  law, 
there  is  no  public  record  and  publicity  of  injuries  and  fatal 
casualties  in  mines,  mills,  and  factories ;  and  in  the  absence 
of  specific  codes  even  inspectors  have  no  power  to  order 
specific  changes  in  the  equipment  and  machinery  of  work 
places.  (2)  Employers  imagine  and  seem  to  believe,  not 
without  some  ground  in  experience,  that  it  is  cheaper  to 
pay  indemnities  occasionally  or  evade  them  by  delay  and 
litigation,  than  to  introduce  protective  devices  which  have 
proved  to  be  effective  but  which  cost  money.  (3)  When 
the  employers  have  paid  the  premiums  to  casualty  companies 
for  insuring  themselves  against  costs  in  damage  suits  they 
imagine  they  have  no  further  financial  reason  for  going  to 
expense  to  prevent  accidents  beyond  what  is  absolutely 
necessary;  the  insurance  company  carries  the  risk.  (4)  The 
employers'  liability  law  does  not  cover  occupational  diseases 
but  only  accidents. 

288 


PROTECTIVE  LEGISLATION  289 

In  the  purely  agricultural  occupations,  especially  before 
the  general  introduction  of  farm  machinery,  there  was  no 
demand  for  protective  legislation.  The  employer  shared  all 
risks  with  his  employees,  if  he  had  any  wage-workers  to 
assist  him,  and  the  employers'  liability  law  was  rarely  in- 
voked. The  dangers  of  the  mines  very  early  called  for  the 
attention  of  legislators  in  the  states  where  deposits  of  coal 
and  minerals  were  found;  and  the  railroads  became  so 
destructive  of  limb  and  life  that  state  and  federal  legislation 
was  called  for  at  the  demand  of  employees  and  the  public.1 
The  federal  Congress  has  no  power  to  make  laws  except 
for  the  District  of  Columbia  and  for  interstate  commerce, 
with  modified  control  of  territorial  affairs.  Hence  we  can- 
not expect  to  find  uniform  and  consistent  protective  laws 
for  all  the  states.  Naturally  the  states  in  which  manufactur- 
ing and  mining  industries  developed  earliest  were  the  first 
to  discover  the  need  of  public  control  and  regulation  of  the 
conditions  of  labor.  Massachusetts  has  been  and  still  is 
one  of  the  leading  states  in  this  field ;  for  there  were  happily 
combined  a  rapid  development  of  industry  and  invention, 
an  organization  of  trade-unions  composed  of  intelligent  and 
aggressive  work  people,  and  a  general  spirit  of  enlightened 
philanthropy.  There  also  the  British  laws  met  with  quick 
response  and  had  great  influence.  Nearly  in  the  same  rank 

1  "One  absurdity  of  our  present  law  is  that  it  says :  A  railroad  brake- 
men  cannot  wholly  be  barred  from  compensation  by  the  defense  of 
contributory  negligence,  but  a  structural  steel  worker  or  a  worker  in  a 
sewer  (both  in  very  hazardous  employments)  can  be  debarred  from  com- 
pensation by  that  defense.  The  reason  for  this  is  that  the  accidents  in 
the  railroad  industry  were  the  first  to  attract  attention.  But  that  other 
classes  of  accidents  are  now  relatively  more  important  is  shown  by  the 
following  analysis  of  Wisconsin  Supreme  Court  cases  involving  claims 
by  injured  workmen  against  their  employers.  Before  1890,  three- fourths 
were  railway  cases;  since  1890,  less  than  one-fourth  are  railway  cases."— 
Thirteenth  Biennial  Report  of  the  Bureau  of  Labor  and  Industrial  Acci- 
dents, Wisconsin,  1907-8,  pp.  in,  112. 


290  INDUSTRIAL  INSURANCE 

came  New  York  and  Pennsylvania.  But  recently  some  of 
the  states  of  the  Middle  West  have  come  into  the  front  rank. 
The  chief  difficulties  in  the  way  of  the  extension  of  pro- 
tective legislation  even  in  industrial  states  are:  the  tradi- 
tional dislike  of  employers  to  have  any  kind  of  interference 
with  their  own  absolute  control  of  their  business;  intense 
dislike  of  state  intervention  with  individual  activity ;  the  con- 
stant assertion,  often  honestly  made,  that  employers  do  not 
require  the  spur  of  law  to  make  them  care  for  the  welfare 
of  their  employees ;  the  fear  that  legislation  will  lay  burdens 
on  manufacturers  of  a  certain  state  which  will  cripple  them 
in  competition  with  manufacturers  of  other  states;  perhaps 
some  greed  for  profits  and  dividends  which  dulls  conscience 
and  humanity  in  presence  of  preventable  suffering  and 
death;  and  the  dread  of  political  corruption  in  the  office  of 
factory  inspector  if  he  is  armed  with  power  to  order  ex- 
pensive changes  and  impose  fines.  Whatever  be  the  causes 
the  fact  remains  that  associations  of  employers  invade  legis- 
latures when  protective  bills  are  offered,  flood  legislators 
with  circulars  calculated  to  bring  the  bills  into  contempt, 
use  those  devices  which  have  effect  with  committees  but 
which  are  very  difficult  for  the  public  to  discover,  and  by 
all  arts  finally  defeat  or  mutilate  the  proposed  legislation. 
In  spite  of  these  corrupt,  selfish,  or  misguided  attempts  to 
hinder  or  prevent  progress  many  of  the  employers  actually 
do  introduce  many  of  the  best  protective  devices  and  new 
laws  are  gradually  coming  to  enactment.  When  the  trade- 
unions  and  the  public  have  worked  out  a  consistent  and  com- 
plete social  policy  of  protection  and  insurance  it  will  be 
easy  to  secure  further  laws.  At  present  in  states  where 
industry  has  been  chiefly  rural  there  is  no  educated  public 
opinion  on  the  subject  and  the  conscience  of  the  people  is 
not  directed  against  the  abuses  of  our  newer  forms  of 
economic  life.  If  there  were  a  careful  and  scientific  code 


PROTECTIVE  LEGISLATION  291 

of  labor  legislation,  drawn  by  experts,  it  would  have  a 
better  chance  in  the  legislatures. 

In  this  chapter  we  shall  give  a  brief  analysis  of  the  chief 
measures  already  in  use  and  indicate  by  illustrations  the 
direction  of  the  movement  at  this  time.  Protective  legisla- 
tion is  an  essential  part  of  that  social  policy  in  which 
industrial  insurance  has  a  large  place.  The  tendency  of 
protective  devices  is  to  lower  the  cost  of  insurance,  while  the 
tendency  of  insurance  is  to  offer  a  constant  and  ever-present 
motive  to  avoid  injuries  and  diseases  as  well  as  to  provide 
indemnity  when  injury  is  inevitable.  The  principle  under- 
lying both  movements  is  the  social  interest  and  duty  to  care 
for  the  welfare  of  citizens  exposed  through  general  condi- 
tions to  suffering,  loss,  and  death. 

I.       THE  PROTECTION  OF  ADULT  WORKMEN 

Hours  of  labor. — The  duration  of  labor  affects  the 
health  of  workmen  and  their  liability  to  accident,  and  so 
industrial  efficiency,  earning  power,  longevity,  and  culture. 
Up  to  this  time  legislation  has  not  attempted  to  fix  the 
length  of  the  working  day  for  men  and  women,  except  of 
late  in  specific  employments  where  it  is  necessary  to  limit 
the  strain  of  toil  for  the  sake  of  health.  The  prevalent 
opinion  still  is  that  the  rate  of  wages  and  the  hours  of  labor 
of  adults  should  be  left  to  free  contract  between  employers 
and  employees,  and  to  the  play  of  competitive  forces.  At 
this  point  the  trade-union  helps  nature  by  introducing  col- 
lective bargaining  and  threats  of  strikes,  and  it  is  by  the 
unions  that  reductions  of  the  duration  of  labor  have  thus 
far  been  gained,  aside  from  the  working  of  interest  and 
humanity  in  the  minds  of  employers.  Massachusetts  found 
a  way  to  shorten  the  working  day  of  women  within  the 
limits  of  her  rather  liberal  constitution;  but  the  Supreme 
Court  of  Illinois  voided  a  similar  law  on  the  ground  of  its 
unconstitutionally. 


292  INDUSTRIAL  INSURANCE 

In  the  year  1898  the  federal  Supreme  Court  settled  the 
principle  that  a  state  legislature  may  constitutionally  enact 
a  law  limiting  the  hours  of  labor  for  adults  when  such  limi- 
tation is  necessary  to  preserve  the  health  of  the  workmen  in 
any  particular  occupation.  This  important  decision  has 
the  effect  to  leave  the  state  legislature  free  to  diminish  the 
day  of  toil  when  the  form  of  labor  is  obviously  injurious 
to  health  if  too  long  continued.2  The  decision  of  the 
Supreme  Court  of  the  United  States  (February,  1908),  in 
the  case  of  Curt  Muller  vs.  State  of  Oregon,  settles  the 
principle  beyond  further  dispute.  The  case  involves  a  law 
prohibiting  long  hours  of  labor  for  adult  women  in  laundry 
work,  and  the  counsel,  Mr.  Brandeis,  based  his  argument  on 
facts  showing  that  long  hours  are  dangerous  to  the  health 
of  women  and  injurious  to  their  offspring  and  to  the  race; 
that  the  only  way  to  prevent  these  evils  was  to  require 
shorter  hours  by  law;  that  this  shortening  of  hours  was  a 
benefit  to  all  members  of  society;  that  no  economic  disad- 
vantages would  arise  from  the  working  of  the  law;  that 
uniformity  of  law  was  essential  to  the  efficient  working  of 
the  measure  and  to  justice  to  all  employees  in  competition; 
and  that  a  ten-hour  day  was  reasonable.  Henceforth  the 
right  of  a  state  legislature  to  restrict  working  hours  of  adult 
women  cannot  be  denied. 

The  hours  of  labor  per  day  for  miners  have  been 
restricted  by  law  as  follows:  Arizona,  8  hours;  Colorado, 
8  hours  in  mines,  smelters,  or  "other  branches  of  industry 
or  labor  that  the  general  assembly  may  consider  injurious  or 
dangerous  to  health,  life,  or  limb"  (constitution  of  state, 
adopted  in  1902)  ;  Maryland,  10  hours,  but  contracting  out 
is  permitted;  Missouri,  in  mines  and  smelting  works,  8 

2  Supreme  Court  of  the  United  States,  February  28,  1898.  Case  of 
Holden  vs.  Hardy.  Cf.  F.  Kelley,  Some  Ethical  Gains  through  Legisla- 
tion, 1905,  pp.  145,  280. 


PROTECTIVE  LEGISLATION  293 

hours,  no  contracting  out;  Montana,  mines  and  smelting 
works,  8  hours,  no  contracting  out;  Nevada,  mines  and 
smelting  works,  8  hours,  no  contracting  out;  Utah,  mines 
and  smelting  works,  8  hours  (held  to  be  constitutional: 
14  U.  Rep.  71,  96;  18  Sup.  Ct.  Rep.  383 ;  57  Pac.  Rep.  720)  ; 
Wyoming,  8  hours. 

The  hours  of  the  labor  day  for  employees  of  railroads 
and  street  railways  have  been  restricted  by  laws  of  several 
states:  Arizona,  after  16  hours  the  workmen  must  have  9 
hours'  rest;  Arkansas,  8  hours'  rest  after  16  hours'  service; 
California,  street  railway  employees  cannot  contract  to 
work  over  12  hours;  Colorado,  10  hours'  rest  after  16 
hours'  service;  Florida,  8  hours'  rest  after  13  hours'  work; 
Georgia,  10  hours'  rest  after  13  hours'  run;  Indiana,  8 
hours'  rest  after  16  hours'  work;  Louisiana,  10  hours  within 
12  hours,  except  in  emergency,  and  no  contracting  out; 
Maryland,  street  railways,  12  hours,  no  contracting  out; 
Massachusetts,  street  railways,  10  hours,  except  on  holi- 
days; Michigan,  railroads,  8  hours'  rest  after  24  hours' 
work;  Minnesota,  10  hours,  contract  for  longer  hours  per- 
mitted; Montana,  10  hours;  Nebraska,  8  hours  after  18  of 
service;  New  Jersey,  street  railways,  12  hours,  except  in 
emergency;  New  York,  street  railways,  10  hours,  including 
one-half  hour  for  dinner.;  in  brick  making,  10  hours  with 
right  to  contract  for  longer  day;  railroads,  10  hours,  with 
8  hours'  rest  after  15  hours'  work;  Ohio,  railroads,  8  hours' 
rest  after  15  hours'  work;  Pennsylvania,  street  railways,  12 
hours;  Rhode  Island,  street  railways,  10  hours  within  12, 
contracting  out  permitted;  Texas,  8  hours'  rest  after  16 
of  work;  Washington,  street  railways,  10  hours,  no  con- 
tracting out. 

The  following  states  have  fixed  the  length  of  day  for 
work  on  roads  and  other  public  works :  8  hours  in  Arkansas, 
California,  Colorado,  Delaware,  Hawaii,  Idaho,  Illinois, 


294  INDUSTRIAL  INSURANCE 

Indiana,  Iowa,  Kansas,  Maryland,  Massachusetts  (8  or  9 
in  cities),  Minnesota,  Missouri,  Montana,  Nebraska,  Ne- 
vada, New  Mexico,  New  York,  Oklahoma,  Oregon,  Penn- 
sylvania, Porto  Rico,  South  Dakota,  Tennessee,  Texas, 
Utah,  Washington,  West  Virginia,  Wisconsin,  Wyoming. 
In  South  Carolina  10  hours  is  a  legal  day.  In  textile  mills 
Georgia  has  made  a  legal  day  of  1 1  hours,  with  no  contract- 
ing out  except  in  emergencies.  South  Carolina  has  fixed  1 1 
hours  a  day  or  66  a  week,  except  for  engineers,  and  no  con- 
tracting out. 

In  the  absence  of  a  contract  the  laws  sometimes  specify 
the  hours  of  a  day's  work  but  leave  the  parties  free  to  con- 
tract for  a  longer  day.  Thus  the  "legal  day"  is  8  hours  in 
California,  Connecticut,  Illinois,  Missouri,  New  York,  Ohio, 
Pennsylvania,  Wisconsin;  it  is  10  hours  in  Florida,  Maine, 
Michigan,  Minnesota,  Nebraska,  New  Hampshire,  Rhode 
Island,  Maryland.  In  New  Jersey  it  is  55  hours  in  a  week, 
between  7-12  forenoon  and  1-6  afternoon;  Saturday,  7-12 
in  factories  and  shops  and  60  hours  in  bakeries.  Agri- 
cultural laborers  and  domestic  servants  are  not  protected  by 
these  laws.  The  employees  of  the  federal  government,  in 
the  public  printing  office,  laborers  on  public  works,  and 
letter  carriers  have  an  8-hour  day.  Apparently  the  tendency 
is  generally  toward  an  8-hour  day. 

2.  Weekly  day  of  rest. — Legislation  is  no  doubt  much 
influenced  by  traditional  religious  beliefs  and  customs,  as 
well  as  by  the  desire  for  culture,  recreation,  and  sociable 
converse;  but  the  primary  and  decisive  legal  ground  is  the 
conservation  of  the  health  of  the  workmen.  The  laws  are 
monotonously  uniform  in  the  states,  although  some  of  them 
are  notoriously  dead  letters,  as  those  governing  barbers  and 
amusements  in  the  large  cities.  The  general  formula  is 
that  all  labor  and  trade  are  forbidden  on  Sunday,  works  of 
necessity  and  charity  excepted:  thus  Alabama,  Arkansas, 


PROTECTIVE  LEGISLATION  295 

Connecticut,  Delaware,  Alaska,  District  of  Columbia, 
Florida  (newspapers  excepted),  Georgia,  Hawaii,  Illinois, 
Indiana,  Iowa,  Kansas,  Kentucky,  Louisiana,  Maine,  Mary- 
land, Massachusetts,  Michigan,  Minnesota,  Mississippi, 
Missouri,  Nebraska,  Mexico,  New  York,  North  Carolina, 
North  Dakota  (games  and  sports  included),  Ohio,  Okla- 
homa (games  included),  Oregon,  Pennsylvania  (games 
included),  Porto  Rico,  Rhode  Island  (games  included), 
South  Carolina,  South  Dakota  (games  included),  Tennes- 
see, Texas,  Utah,  Vermont,  Virginia,  Washington,  West 
Virginia,  Wisconsin,  Wyoming.  It  is  expressly  provided 
in  some  states  and  generally  understood,  that  Jews,  Ad- 
ventists,  and  others  whose  religious  beliefs  require  them 
to  observe  Saturday  as  a  day  of  rest  are  permitted  to 
work  on  Sunday,  as  in  Arkansas,  Connecticut.  Cali- 
fornia, Missouri,  and  Pennsylvania  have  laws  securing 
a  weekly  day  of  rest  even  if  it  cannot  fall  on  Sun- 
day. Special  laws  forbid  the  barbers  to  keep  their  places 
open  all  or  part  of  Sunday;  as  in  Colorado,  Delaware, 
Illinois,  Kentucky,  Maryland,  Michigan,  Minnesota,  Mis- 
souri, Montana,  New  York,  North  Dakota,  Ohio,  Tennes- 
see; but  these  laws  are  rarely  enforced.  Railroads  are 
restricted  to  necessary  trains,  sometimes  under  regulations 
of  commissioners:  Connecticut,  Georgia,  Massachusetts, 
North  Carolina,  South  Carolina,  Vermont. 

3.  Protection  against  accident  and  disease. — The  law  of 
Massachusetts  requires  all  poles  of  electric  light  companies 
to  be  insulated  and  the  inspector  of  wires  enforces  the  law. 
In  the  building  industry,  which  with  steel  construction  and 
"sky  scrapers"  becomes  ever  more  dangerous,  the  laws  of 
a  few  states  provide  some  protection  by  prescribing  the 
kinds  of  scaffolding,  protecting  floors,  shafting,  hoisting 
apparatus,  etc. :  California,  Indiana,  Maryland,  Massa- 
chusetts, Minnesota,  Missouri,  New  York,  Ohio,  Pennsyl- 


296  INDUSTRIAL  INSURANCE 

vania,  Wisconsin,  and  a  recent  law  of  1907,  in  Illinois. 
The  law  of  New  York  is  elaborate  and  carefully  drawn. 
Employees  on  street  railways  are  protected  by  regulations 
prescribing  the  inclosure  of  platforms  for  drivers  and 
motor  men  to  shield  them  from  rain  and  snow  and  cold  in 
winter  months :  Colorado,  Connecticut,  Illinois,  Iowa,  Kan- 
sas, Massachusetts,  Michigan,  Minnesota,  Missouri,  Ne- 
braska, New  Hampshire,  New  York,  North  Carolina, 
Tennessee,  Texas,  Utah,  Virginia,  Washington,  West 
Virginia,  Wisconsin.  The  very  language  of  all  these  laws 
is  uniform,  probably  showing  that  the  national  union  of 
street  railway  employees  has  secured  the  enactment  of  this 
desirable  protection  by  a  concerted  movement,  and  that  the 
national  convention  of  factory  inspectors  has  promoted 
uniformity. 

The  following  states  have  enacted  laws  prescribing  the 
use  of  fire  escapes  in  connection  with  workshops  and  pro- 
viding agencies  for  enforcing  the  law :  Connecticut,  Dela- 
ware, District  of  Columbia,  Georgia,  Idaho,  Illinois,  Indiana, 
Iowa,  Kansas,  Louisiana,  Maine,  Maryland,  Massachusetts, 
Michigan,  Minnesota,  Missouri,  Nebraska,  New  Jersey,  New 
York,  North  Dakota,  Ohio.  The  requirements  include  iron 
ladders  on  the  outside  of  the  wall,  doors  to  open  outward, 
red  lights  to  direct  to  exits,  and  fire  extinguishers  at  con- 
venient places.  The  laws  of  New  York,  Ohio,  and  Wis- 
consin are  examples  of  carefully  drawn  statutes.  Even 
when  the  law  is  good  much  will  depend  on  its  enforcement 
by  a  sufficient  corps  of  competent  and  faithful  inspectors. 

Railroad  safety  appliances. — The  number  of  employees 
injured  and  killed  on  trains  and  tracks  is  so  great  as  to 
excite  general  interest  and  secure  legislation.  In  the  case 
of  railroads  which  transport  passengers  and  goods  from 
state  to  state  the  federal  Congress  has  used  its  constitutional 
right  to  make  laws,  and  the  code  of  interstate  traffic  is  a 


PROTECTIVE  LEGISLATION  297 

model  for  the  several  states.  The  chief  matters  thus  brought 
under  regulation  are:  power  brakes,  automatic  couplers, 
grab  irons,  draw  bars,  blocking  of  frogs  to  prevent  catching 
the  feet  between  rails,  tell-tales  or  warning  signals  before 
bridges.  The  following  states  have  enacted  laws  making 
regulations  for  local  roads :  Colorado,  Connecticut,  Dela- 
ware, Illinois,  Indiana,  Iowa,  Kentucky,  Louisiana,  Maine, 
Massachusetts,  Michigan,  Minnesota,  Mississippi,  Missouri, 
Nebraska,  New  Hampshire,  New  York,  Ohio,  Rhode 
Island,  South  Carolina,  Texas,  Vermont,  Virginia,  Wash- 
ington, Wisconsin. 

Reports  and  investigation  of  accidents. — Publicity  of 
accidents  is  desirable  to  promote  wise  legislation  and 
awaken  public  sentiment  against  negligence  of  employers 
and  corporations.  This  is  provided  for  by  the  federal  law 
which  requires  all  common  carriers  to  report  to  the  Inter- 
state Commerce  Commission  each  month  all  casualties. 
Various  states  require  reports,  coroners'  inquests  of  fatal 
accidents,  and  careful  investigation  of  the  causes  of  injuries; 
as  Alabama,  Connecticut,  Massachusetts,  New  York,  South 
Carolina,  Vermont.  Recent  legislation  in  Wisconsin  and 
Illinois  gives  promise  of  favorable  results  in  this  field. 

Protection  of  agricultural  laborers. — Apparently  only 
three  states  (Illinois,  Iowa,  and  Wisconsin)  have  begun  to 
make  laws  on  this  subject,  in  spite  of  the  fact  that  dangerous 
machinery  is  used  on  a  vast  scale  in  the  rural  occupations. 
In  the  states  named  the  law  requires  the  owners  of  threshing 
and  shelling  machines  which  are  run  by  horse  or  steam 
power  to  provide  for  them  proper  protective  guards. 

Inspection  of  steam  boilers. — The  laws  on  this  subject 
are  of  unequal  value.  The  inspection  is  sometimes  com- 
mitted to  state  officials  and  sometimes  to  local  authorities. 
The  legal  regulations  in  the  better  laws  give  minute  direc- 
tions for  testing  the  boilers  by  hydrostatic  pressure,  the 


298  INDUSTRIAL  INSURANCE 

tension  required,  gauge  cocks,  safety  valves,  fusible  plugs, 
qualifications  of  engineers,  etc.  The  following  states  have 
made  laws  on  this  subject :  Colorado,  Connecticut,  Florida, 
Indiana,  Iowa,  Maine,  Missouri,  Massachusetts,  Michigan, 
Minnesota,  New  York,  Ohio,  Pennsylvania,  Vermont. 

Mine  regulations. — The  principal  points  guarded  in 
these  laws  are  ventilation  of  mines,  testing  the  air.  provi- 
sions of  stretchers  and  blankets,  bandages,  etc.,  in  case  of 
injuries,  exits  in  the  walls,  supporting  timbers  for  the  roof, 
safety  lamps,  escape  shafts,  maps  of  mines,  secure  cages  and 
elevators,  and  signals.  It  is  a  general  principle  that  accidents 
must  be  reported  and  investigated.  The  following  states, 
besides  the  federal  government,  have  enacted  codes  of  mine 
regulations:  Alabama,  Arkansas,  California,  Colorado, 
Idaho,  Illinois,  Indiana,  Iowa,  Kansas,  Kentucky.  Man-land, 
Michigan,  Missouri,  Montana,  Nevada,  Ne\v' Jersey,  Xew 
Mexico,  New  York,  North  Carolina,  Ohio,  Oregon,  Penn- 
sylvania, South  Dakota,  Tennessee,  Texas,  Utah,  Washing- 
ton, West  Virginia,  Wyoming.  The  law  of  Pennsylvania 
is  quite  elaborate  since  the  conditions  of  the  anthracite  and 
the  bituminous  mines  are  quite  different.  The  laws  of  New 
York,  Illinois,  and  Indiana  may  be  studied  as  types  of 
carefully  drawn  regulations. 

II.      THE  EMPLOYMENT  OF  WOMEN 

The  general  doctrine  governing  the  employment  of 
adult  women  is  that  sex  is  no  disqualification  for  occupation ; 
a  woman  is  free  to  make  a  contract  for  work  and  wages 
equally  with  a  man.  This  principle  is  distinctly  affirmed  in 
the  laws  of  California,  Illinois  and  Washington.  Thus  the 
constitution  of  California  (Art.  20,  Sec.  18)  says:  "No 
person  shall,  on  account  of  sex,  be  disqualified  from  enter- 
ing upon  or  pursuing  any  lawful  business,  vocation,  or 
profession."  This  principle  does  not  carry  with  it  the  duty 
of  serving  on  police  or  jury  or  in  the  army,  nor  the  right  of 


PROTECTIVE  LEGISLATION  299 

suffrage  or  holding  public  office,  unless  there  is  express  legal 
provision.  But  this  doctrine  must  be  further  modified  when 
health,  decency,  and  morality  are  in  danger ;  and  so  we  have 
specific  limitations  and  prohibitions  of  the  occupations  of 
women.  Some  employments  are  entirely  closed  to  women. 
Thus  women  and  girls  are  prohibited  from  employment 
where  intoxicating  liquors  are  sold:  in  Alaska  (Act  of 
Congress),  Iowa,  Louisiana,  Maryland,  Michigan,  Missouri, 
New  Hampshire,  New  York,  Vermont,  Washington.  Some- 
times the  wife  or  daughter  of  the  barkeeper  may  be  ex- 
cepted  from  the  prohibitory  rule.  The  employment  of 
women  and  girls  in  and  about  mines,  except  in  offices,  is 
generally  forbidden,  as  in  Pennsylvania  and  Alabama. 

Various  laws,  apparently  passed  in  consequence  of  a 
general  movement  of  women's  clubs  throughout  the  country, 
uniform  in  language,  are  designed  to  insure  suitable  sur- 
roundings and  conveniences  for  women  workers.    Thirty- 
two  states  have  laws  requiring  seats  for  female  employees 
in  mercantile  establishments  and  factories,  and  their  use 
must  be  permitted  for  rest  when  the  women  are  not  actively 
engaged  in  an  occupation  which  prevents  them  from  sitting 
down.     Separate  washing  and  dressing  rooms  and  water- 
closets  must  be  provided.    Rooms  must  be  kept  comfortably 
warm  in  cold  weather.     Abusive,  profane,  and  indecent 
language  and  all  improper  treatment  are  forbidden  (laws  of 
Delaware,  Indiana,  Louisiana,  Ohio,  Tennessee,  Nebraska, 
Oregon,  Washington).3 

Massachusetts,  with  its  enlightened  social  policy  and 
liberal  constitution,  provides  that  no  woman  can  be  employed 
in  a  mercantile  establishment  more  than  58  hours  a  week, 
except  in  emergencies,  nor  in  a  manufacturing  establishment 
more  than  10  hours  a  day,  or  58  hours  a  week,  with  similar 
exceptions.  The  supreme  court  of  the  state  has  approved 

*  Curt  Mailer  vs.  Oregon,  see  above. 


300  INDUSTRIAL  INSURANCE 

this  law  (120  Massachusetts  383).  Illinois  passed  a  similar 
law,  but  it  was  made  void  by  its  supreme  court.  The  law 
of  Colorado  forbids  the  employment  of  women  of  16  years 
of  age  or  more  during  more  than  8  hours  in  24,  when  the 
occupation  requires  her  to  stand  on  her  feet.  The  limit 
is  fixed  at  10  hours  in  North  Dakota,  Oklahoma,  Rhode 
Island,  South  Dakota,  Virginia,  Louisiana,  New  Hamp- 
shire, Connecticut,  Oregon,  Washington,  Nebraska;  at  8 
hours  in  Wisconsin.  In  New  York  women  between  16  and 
21  years  may  not  work  over  60  hours  in  a  week;  in  Penn- 
sylvania, 12  hours  a  day,  but  not  over  60  hours  in  a  week. 
Indiana  forbids  women  to  work  in  factories  between  10 
p.  M.  and  6  A.  M.  Massachusetts  and  Nebraska  have  the 
same  rule.  In  New  York  the  prohibited  hours  are  between 
9  P.  M.  and  6  A.  M. 

III.       CHILDREN 

While  legislatures  and  courts  in  the  United  States  have 
been  slow  to  interfere  with  the  right  of  contract  and  the 
control  of  work  places  by  employers  so  long  as  adults  only 
are  concerned,  they  have  been  led  to  take  a  different  view 
of 'the  duty  of  the  state  in  relation  to  children  and  minors. 
Here  the  failure  of  the  laissez-faire  policy  is  too  obvious  to 
ignore,  and  even  the  ancient  English  law  required  children 
as  objects  of  particular  concern  of  certain  courts. 

Very  generally  there  are  statutory  prohibitions,  sup- 
ported by  penalties  and  enforced  by  inspectors,  against  the 
employment  of  children  in  public  exhibitions  and  in  occupa- 
tions dangerous  to  health  and  morals,  as  mendicancy, 
acrobatic  and  immoral  employments.  Such  laws  have  been 
enacted  in  California,  Colorado,  Connecticut,  Delaware, 
Georgia,  District  of  Columbia,  Illinois,  Indiana,  Iowa, 
Kansas,  Kentucky,  Louisiana,  Maryland,  Massachusetts, 
Michigan,  Minnesota,  Missouri,  Montana,  New  Hampshire, 
New  Jersey,  New  York,  Ohio,  Pennsylvania,  Porto  Rico, 


PROTECTIVE  LEGISLATION  301 

Rhode  Island,  Virginia,  West  Virginia,  Wisconsin,  Wyom- 
ing. Employment  of  children  in  bar-rooms  and  other  places 
where  intoxicants  are  sold  is  forbidden  by  law  in  Connecti- 
cut, Alaska  (Act  of  Congress),  Georgia,  Missouri,  Massa- 
chusetts, South  Dakota.  Work  in  mines  is  universally 
known  to  be  dangerous  to  children  and  the  laws  of  the 
following  states  prohibit  work  of  boys  (as  well  as  of 
females)  in  mines,  the  age  being  fixed  at  12  or  14  years: 
Alabama,  Arkansas,  Colorado,  Illinois,  Indiana,  Missouri, 
Pennsylvania  (16  years  in  mines,  14  outside),  Utah,  Wash- 
ington, West  Virginia,  Wyoming.  There  is  a  marked 
tendency  to  regard  it  as  improper  to  permit  the  employment 
of  children  and  youth  in  factories  and  mercantile  estab- 
lishments at  the  sacrifice  of  elementary  education.  The 
most  advanced  position  is  taken  by  those  states  which 
positively  prohibit  the  work  of  children  under  a  certain  age 
and  require  their  parents  and  guardians  to  keep  them  in 
school  if  the  public  schools  are  in  session.  Thus  in  Massa- 
chusetts children  must  attend  school  from  the  seventh  to 
the  fourteenth  year.  In  Montana  children  must  attend 
school  from  the  eighth  to  the  fourteenth  year,  not  less  than 
1 6  weeks  in  the  year.  In  the  enforcement  of  these  laws  a 
difficulty  has  been  met:  there  are  families  so  poor  that  the 
earnings  of  the  children  seem  to  be  required  to  supply  the 
wants  of  the  family.  This  difficulty  has  been  met  in  some 
states  in  a  way  which  seems  disgraceful  by  giving  poor 
widows  and  incapable  fathers  permission  to  keep  their  chil- 
dren out  of  school  and  take  their  earnings.  This  is  the 
law  in  Texas  for  children  12  to  14  years  of  age.  Other 
states  find  the  same  difficulty  but  overcome  it  in  more 
honorable  fashion — they  provide  material  relief  for  the 
family  and  do  not  permit  the  child  to  bear  the  sacrifice ;  thus 
Indiana  and  Ohio.  Private  charity  sometimes  intervenes. 
Even  after  school  age,  usually  14  to  16,  if  the  young 


302  INDUSTRIAL  INSURANCE 

person  is  still  unable  to  read  and  write  English,  he  must  in 
some  states  either  attend  the  evening  schools,  or  attend  the 
day  schools  until  he  acquires  a  certificate  of  proficiency; 
thus  Washington,  New  Hampshire,  Maryland,  Massa- 
chusetts, Michigan,  Minnesota,  Montana,  Connecticut, 
Maine. 

Permitted  child  labor  is  subject  to  regulation  to  prevent 
abuses.  Thus  in  New  York  there  is  a  carefully  devised  code 
(Labor  Laws,  p.  825)  which  prescribes  that  annual  licenses 
must  be  given  to  children  who  are  permitted  to  engage  in 
street  trades. 

Age  limit. — Rather  slowly  but  with  sure  step  legislation 
moves  forward  in  the  direction  of  preventing  the  exploita- 
tion of  the  vitality  of  young  children  by  premature  labor. 
There  is  a  gradation  in  the  prohibitions ;  for  young  children 
work  in  factories  and  mercantile  establishments  is  usually 
altogether  forbidden ;  for  young  persons  it  is  permitted  with 
various  restrictions.  The  children  under  12  years  are 
simply  forbidden  to  work  in  factories  and  mills;  as  in 
California,  Maine,  Maryland,  New  Hampshire,  North 
Carolina,  Wisconsin.  Children  under  12  are  forbidden  to 
work  unless  their  parents  are  very  poor,  as  in  Alabama, 
Texas,  Arkansas;  but  even  there  children  under  10  cannot  be 
excepted.  In  Minnesota  the  age  is  14  years,  but  children  of 
dependent  parents  may  be  licensed  to  work.  In  Rhode 
Island  all  labor  under  12  is  forbidden.  In  South  Carolina 
12  years  is  the  limit.  In  Louisiana  boys  cannot  work  under 
12  nor  girls  under  14  years;  in  Pennsylvania,  13  years;  in 
Massachusetts,  Indiana,  New  York,  Michigan,  New  Jersey, 
Ohio,  Oregon,  it  is  14  years.  Children  are  forbidden  to 
work  while  public  schools  are  in  session  in  Illinois,  South 
Dakota  (8-14  years),  Vermont  (15  years),  Washington 
(15  years),  Wisconsin  (12-14  years).  Young  persons 
from  1 2-1 6  years  may  work  under  regulations,  as  in  Cali- 


PROTECTIVE  LEGISLATION  303 

fornia,  if  they  have  certificate  of  age  and  education.  In 
Massachusetts  those  between  14-16  years  must  be  certified. 

The  hours  of  labor  are  restricted  by  law:  in  Alabama, 
under  12  years,  66  hours  a  week;  Arkansas,  under  14  years, 
60  hours  a  week;  California,  under  18  years,  54  hours  a 
week;  Illinois,  under  14  years,  8  hours  a  day — under  16 
years,  48  hours  a  week;  Indiana,  under  16  years,  60  hours 
a  week;  Louisiana,  under  18  years,  10  hours  a  day;  Maine, 
females  under  18,  males  under  16,  10  hours  a  day;  Minne- 
sota, under  14  years,  10  hours  a  day;  New  York,  under  16 
years,  9  hours  a  day;  under  18  years,  60  hours  a  week; 
North  Carolina,  under  18  years,  66  hours  a  week;  Oregon, 
under  16,  10  hours  a  day,  6  days;  Wisconsin,  under  18 
years,  8  hours  a  day. 

Night  work  of  children. — Children  of  13-15  years  are 
not  to  work  between  7  p.  M.  and  6  A.  M.  in  Alabama, 
Arkansas,  Illinois,  Massachusetts,  Michigan,  Ohio,  Oregon. 
In  New  York  the  law  forbids  children  under  16  years  from 
working  between  9  P.  M.  and  6  A.  M.;  in  South  Carolina 
children  under  12  may  not  work  between  8  P.  M.  and  6  A.  M. 
In  Texas  children  12  to  14  years  may  not  work  between 
6  P.  M.  and  6  A.  M.  Minnesota  requires  a  certificate  of 
physical  fitness  for  work — a  principle  which  is  influential 
in  the  discussion  and  legislation  of  other  states.  The  inade- 
quacy of  the  age  test  alone  is  generally  recognized.4 

IV.       FACTORY  INSPECTION 

No  protective  law  is  self-enforcing,  and  it  is  evidence  of 
moral  insincerity  or  ignorance  in  a  legislature  to  pass  a 
code  of  regulations  without  providing  money  and  organiza- 
tion for  competent  inspection  of  work  places.  The  majority 
of  employers  in  all  countries,  as  a  rule,  will  not  voluntarily 
execute  a  law  which  casts  on  them  a  financial  burden  and 

4  See  Josephine  Goldsmith,  Child  Labor  Legislation,  Handbook  Na- 
tional Consumers'  League,  1908. 


304  INDUSTRIAL  INSURANCE 

trouble,  and  employees  are  everywhere  afraid  to  complain 
for  fear  of  discharge  from  employment.  As  might  be 
expected  from  what  has  already  been  said,  there  is  no 
general  system  of  regulation  and  inspection  common  to  all 
the  states.  Yet  one  can  discover  considerable  similarity  and 
even  identity  of  language  in  the  laws.  The  older  states 
copied  many  provisions  from  the  British  laws  and  the  newer 
states  imitated  these.  In  the  volume  of  Labor  Laws  which 
is  here  used  for  data  we  observe  the  greatest  differences  in 
extent  of  provisions,  from  the  elaborate  codes  of  New  York, 
Massachusetts,  Pennsylvania,  down  to  the  statute  of  Nevada 
whose  sole  contribution  seems  to  be  the  requirement  that 
set  screws  must  be  countersunk!  Sometimes  the  statute 
makes  a  rigid  requirement  and  leaves  it  to  benevolent  em- 
ployers to  interpret  and  apply  at  their  discretion,  and  some- 
times the  office  of  inspector  is  created  without  giving  the 
partisan  appointee  any  serious  duties  to  perform.  Probably 
it  is  expected  in  such  cases  that  the  "County  Chairman"  will 
keep  him  busy  at  patriotic  tasks !  In  the  purely  agricultural 
states,  rapidly  diminishing  in  number,  the  need  for  regula- 
tions is  not  widely  felt;  but  factories  are  rapidly  springing 
up  everywhere  and  control  becomes  imperative.  Factory 
inspectors  are  appointed  in  the  following  states :  California, 
Connecticut,  Delaware,  Illinois,  Indiana,  Kansas,  Kentucky, 
Maine,  Missouri,  New  Jersey,  New  York,  Ohio,  Pennsyl- 
vania, Rhode  Island,  Tennessee,  Washington,  West  Vir- 
ginia, Wisconsin.  Mine  inspectors  are  appointed  in 
Alabama,  Arkansas,  Colorado,  Idaho,  Illinois,  Indiana, 
Iowa,  Kansas,  Kentucky,  Maine,  Maryland,  Michigan, 
Missouri,  Montana,  New  Jersey,  New  York,  North  Caro- 
lina, Ohio,  Pennsylvania,  South  Dakota,  Tennessee,  Utah, 
Washington,  West  Virginia,  Wyoming,  United  States  (fed- 
eral laws).  There  are  railroad  inspectors  in  Massachusetts, 
Michigan,  Ohio,  Washington. 


PROTECTIVE  LEGISLATION  305 

Since  it  is  impossible  to  describe  in  this  place  all  the 
forms  of  organization,  we  may  select  New  York  as  one  of 
the  most  highly  developed  and  specialized.  By  law  a  depart- 
ment of  labor  was  created,  over  which  is  placed  a  commis- 
sioner of  labor  appointed  by  the  governor  by  and  with  the 
advice  of  the  senate.  The  commissioner  of  labor  has  the 
powers  and  duties  belonging  to  the  offices  of  factory  in- 
spector, labor  statistics,  and  mediation  and  arbitration,  and 
three  bureaus  exist  for  these  three  objects.  The  immediate 
direction  of  the  bureau  of  labor  statistics  is  lodged  with 
a  deputy  commissioner,  while  another  deputy  commissioner 
has  charge  of  the  bureau  of  factory  inspection.  The  com- 
missioner of  labor,  with  the  aid  of  the  deputy  named,  is 
required  to  collect,  assort,  systematize  and  present  in  annual 
reports  to  the  legislature  statistical  details  in  relation  to 
commercial,  industrial,  social,  and  sanitary  conditions  of 
workingmen  and  productive  industries  in  the  state.  Em- 
ployers are  required  by  law  to  furnish  information  desired. 
A  free  public  employment  bureau  is  under  the  charge  of 
the  commissioner  of  labor  in  several  cities  of  the  state.  The 
factory  inspector  may  appoint  not  more  than  fifty  persons 
as  deputy  factory  inspectors,  not  more  than  ten  of  whom 
shall  be  women,  and  these  may  be  removed  by  him  at  any 
time.  The  salary  of  the  deputy  factory  inspector  is  $1,200. 
Special  deputies  are  appointed  to  inspect  bakeries  and  mines. 
It  is  the  duty  of  the  inspectors  to  visit  factories  as  often  as 
practicable  and  to  enforce  the  laws.  Any  lawful  municipal 
ordinance  relating  to  factories  shall  be  enforced  by  the  state 
inspectors.  The  salary  of  the  commissioner  is  $3,000  and 
of  his  two  deputies  $2,500  each;  but  the  positions  may 
change  with  party  or  factional  changes  and  there  is  little 
prospect  for  a  professional  career.  If  an  employer  violates 
the  law  the  inspector  lays  complaint  before  the  county 
attorney,  with  all  the  proofs,  and  it  is  the  duty  of  the 


306  INDUSTRIAL  INSURANCE 

attorney  to  prosecute.  In  certain  cases  the  inspector  is 
authorized  to  accept  arrangements  which  he  regards  as 
equivalent  to  those  named  in  the  law ;  for  example,  the  fire 
escape  in  a  factory  may  be  of  any  kind  which  in  the  judg- 
ment of  the  inspector  is  reliable  and  sufficient  for  its  purpose. 
The  inspector  of  a  bakery  may  determine  the  method  of 
drainage  and  ventilation  in  a  building.  The  department  can 
make  regulations  for  the  security  of  miners  in  coal  mines 
and  quarries.  An  employer  who  tries  to  hinder  an  inspector 
is  liable  to  punishment.  Supervision  of  home  industries  in 
making  clothing  belongs  to  boards  of  health,  while  work- 
men on  railroads  are  under  the  care  of  railroad  commis- 
sioners. The  inspection  of  steam  boilers  in  the  city  of 
Greater  New  York  is  under  the  charge  of  the  police  auth- 
orities. This' board  is  empowered  to  appoint  inspectors  and 
make  regulations. 

Similar  provisions  were  recommended  to  the  legislature 
of  Illinois  at  the  last  session  in  1907,  but  rejected,  for  the 
most  part,  chiefly  on  the  ground  that  the  law  gave  too  much 
authority  to  the  factory  inspector.  In  America,  where  the 
"spoils  system"  is  still  at  work  with  corrupting  influence, 
the  factory  inspector  is  feared  by  employers  not  only  be- 
cause he  is  tempted  to  enforce  the  law  too  rigidly  but 
because  custom  makes  bribes  and  blackmail  only  too 
frequent. 

In  1908  the  legislature  of  New  York  placed  the  inspec- 
tion of  mercantile  establishments  under  the  Department  of 
Labor,  in  a  Bureau  of  Mercantile  Inspection.  It  had  been 
found  that  control  by  local  boards  of  health  was  ineffective.5 

6  Special  studies,  with  historical  background,  are  F.  R.  Fairchild, 
History  of  Labor  Legislation  in  New  York;  Alba  M.  Edwards,  The  Labor 
Legislation  of  Connecticut ;  J.  K.  Towles,  Factory  Legislation  in  Rhode 
Island;  these  in  Vols.  VI  (1905),  VIII  (1907),  and  IX  (1908),  of  "Publi- 
cations of  American  Economic  Association." 


CHAPTER  XII 
SURVEY  AND  OUTLOOK 

There  are  already,  as  we  have  seen  in  the  preceding 
chapters,  various  systems  of  industrial  insurance  in  the 
United  States  which  witness  to  the  universal  sense  of  need 
of  such  protection  even  among  those  workers  who  have 
least  developed  habits  of  thrift.  These  imperfect  and  un- 
related schemes  are  yet  to  be  developed,  co-ordinated, 
regulated,  and  combined  so  as  to  form  a  consistent,  com- 
prehensive, and  adequate  system.  The  hope  of  progress 
lies  in  these  germinal  beginnings,  and  the  problem  im- 
mediately before  the  nation  is  one  of  synthesis.  Evolution 
does  not  make  great  leaps,  for  even  the  "sports"  which 
figure  in  the  "mutation  theory"  of  DeVries  are  closely  akin 
to  the  parent  stock. 

Is  universal  insurance  an  economic  possibility?  A  com- 
plete answer  to  this  question  would  require  extended 
discussion.  A  few  things  may  be  suggested.  The  profit 
fund  could  carry  a  very  large  share  of  the  burden,  as  shown 
by  the  fact  that  employers  are  marvelously  prosperous,  and 
by  the  fact  that  even  now,  though  in  a  very  uncertain  way, 
they  set  apart  a  vast  sum  for  helping  workmen  in  times  of 
disability  in  the  form  of  contributions  to  sickness  funds, 
hospitals,  physicians,  and  gifts  to  families  in  distress,  not 
to  speak  of  taxes  for  public  relief  and  enormous  costs  for 
casualty  insurance  and  litigation,  which  is  now  waste.  The 
wages  fund  could  bear  a  much  heavier  drain  for  insurance 
if  we  can  judge  from  the  immense  sums  spent  by  workmen 
for  objects  which  are  destructive  to  health  and  morals.  It 
is  true  that  the  unskilled  workmen  have  no  margin  for 
adequate  insurance,  and  those  who  cannot  supply  even  the 

307 


308  INDUSTRIAL  INSURANCE 

immediate  necessities  of  existence  can  hardly  be  expected  to 
provide  for  the  future  without  help  from  the  profit  fund  and 
from  consumers. 

Systems  and  schemes  of  industrial  insurance. — (i)  The 
workingmen  have  themselves  created  organizations  for 
insurance,  and  thereby  express  a  universal  sense  of  need  of 
this  protection;  local  mutual  benefit  societies,  with  or  with- 
out aid  from  employers,  national  brotherhoods  or  fraternals, 
and  trade-unions  with  local  branches.  (2)  Employers  have 
promoted  the  movement  by  various  methods :  local  societies 
of  employees,  insurance  departments  of  great  firms  or  cor- 
porations, contracts  between  firms  and  casualty  companies, 
pension  schemes  of  employing  corporations.  (3)  Private 
insurance  companies  which  sell  sickness  and  accident  insur- 
ance to  workmen,  "industrial  insurance  companies"  collect- 
ing small  premiums  weekly  or  monthly,  and  furnishing 
chiefly  burial  benefits  to  the  low-paid  workmen,  and  regular 
life  insurance  to  those  who  have  higher  wages.  (4)  Or- 
ganizations of  municipal,  state,  and  federal  employees  for 
pension  funds,  as  those  of  teachers,  firemen,  policemen ;  the 
national  and  state  military  pensions;  homes  for  invalid 
veterans.  Here  also  may  be  counted  as  auxiliary  and  supple- 
mentary government  activities,  poor  relief,  liability  laws, 
protective  factory  laws  and  inspection,  and  state  supervision 
of  fraternal  societies  and  insurance  corporations.  Every 
one  of  these  agencies  and  organizations  represents  some 
beginning  of  a  movement  toward  obligatory  insurance.  The 
cities  have  already  recognized  their  duty  to  care  for  the 
policemen,  firemen,  and  teachers;  and  it  will  be  difficult  to 
answer  the  question  of  other  employees  of  cities,  many  of 
them  far  more  in  need  of  protection,  why  they  should  not 
be  included.  The  nation  and  the  states  have  already  de- 
clared it  to  be  our  duty  to  shelter  the  aged  and  wounded 
soldier,  why  should  the  victims  of  the  "army  of  labor"  be 


SURVEY  AND  OUTLOOK  309 

neglected?  They  also  have  served  their  country  in  occupa- 
tions even  more  dangerous  and  destructive  than  war,  and 
quite  as  useful.  Public  poor  relief  has  already  acknowl- 
edged the  duty  of  the  community  to  support  its  members 
who  are  incapable  of  labor;  but  experience  has  taught  that 
this  method  tends  to  humiliate  and  degrade  the  recipients 
and  it  is  manifestly  better  from  every  point  of  view  to 
prevent  the  need  of  appeal  to  poor  relief  by  creating  an 
insurance  fund,  so  far  as  this  is  possible. 

The  employers'  liability  laws  recognize  in  a  restricted 
field  the  principle  that  the  responsible  managers  of  business 
should  indemnify  employees  for  injuries  due  to  the  occupa- 
tion, that  is,  so  far  as  the  employer  is  responsible  for  the 
injury.  Perhaps  10  to  15  per  cent,  of  the  cases  of  injuries 
in  occupations  are  theoretically  covered  by  this  legal  device. 
The  trade-unions  are  seeking  by  all  means  in  their  power, 
and  supported  by  the  humane  feelings  of  the  people,  to  make 
this  law  more  and  more  drastic;  and  at  least  some  of  the 
courts,  with  their  elective  judges  dependent  on  the  votes 
of  the  workmen,  are  more  and  more  inclined  to  make  this 
law  practically  not  only  compensatory  but  even  punitive  in 
its  working.  The  result  in  increasing  numbers  of  cases 
is  wrong  to  the  employer.  The  juries,  wherever  the  case 
is  decided  by  them,  are  inclined  to  give  the  employee  the 
benefit  of  the  law  to  the  full  extent.  On  the  other  hand,  the 
employers  are  compelled  to  pay  heavy  premiums  to  protect 
themselves  against  an  artificial  risk  created  by  the  law  itself, 
and  these  premiums  are  already  a  charge  on  the  cost  of 
production  and  levied  in  the  prices  of  commodities  upon 
the  consumer.  The  intervention  of  a  casualty  company 
under  these  conditions  not  only  widens  the  breach  between 
employers  and  employees,  but  it  tends  to  make  the  insuring 
companies,  who  are  doing  a  legitimate  business,  exceedingly 
hated  by  the  employees  and  their  friends.  This  conflict 


310  INDUSTRIAL  INSURANCE 

tends  to  lower  the  efficiency  of  labor,  the  productivity  of 
capital,  and  to  crowd  the  courts  with  damage  suits  which 
obstruct  ordinary  business  of  courts.  The  time  seems  ripe 
for  a  change  of  the  law.  Logically,  factory  laws  and 
protective  legislation  generally  lead  to  industrial  insurance. 
If  it  is  proper  for  the  state  to  require  employers  to  prevent 
preventable  accidents,  then  it  is  a  rational  function  of  gov- 
ernment to  secure  indemnity  for  loss  of  earning  power 
caused  by  occupations.  Up  to  this  time  it  cannot  be  said 
that  American  states  have  any  definite  "social  policy." 
Legislation  has  been  modified  here  and  there  by  the  modern 
conception  that  the  state  owes  certain  duties  toward  those 
who  are  in  an  economic  position  of  dependence;  but  this 
progress  has  been  gained  in  spite  of  the  ruling  social  phil- 
osophy of  individualism.  Outside  of  the  poor  law  and  the 
employers'  liability  law,  with  certain  factory  regulations, 
the  law  has  offered  to  the  working  man  chiefly  empty 
formulas  about  liberty  of  contract  which  had  no  economic 
content  to  fill  their  phrases  with  real  meaning.  Why  have 
the  states  been  so  slow  to  enter  the  modern  path  of  a  genu- 
ine "social  policy,"  in  which  the  welfare  of  those  in  a  semi- 
dependent  economic  position  has  been  made  the  distinct 
object  of  public  care?  The  employers'  liability  laws,  the 
poor  relief  laws,  and  the  public  schools  are  indications  of  a 
growing  belief  in  the  right  direction,  but  the  logic  of  such 
organizations  is  not  clearly  recognized  and  appreciated.  The 
reasons  have  already  been  discussed.  Free  land,  to  be  had 
for  asking  and  taking,  has  until  recently  offered  to  any  man 
who  did  not  wish  to  be  in  a  subordinate  position  the  oppor- 
tunity of  becoming  a  landlord  and  a  capitalist,  taking  the 
risks  of  life  on  his  own  account;  and  hence  it  was  thought 
America  had  forever  escaped  the  formation  of  an  "industrial 
group"  whose  members  were  to  remain,  and  their  children 
after  them,  in  the  situation  of  persons  living  day  by  day  on 


SURVEY  AND  OUTLOOK  311 

daily  wages.  Individualism  ruled  our  ethics,  economics, 
theology,  legislation,  courts,  and  politics.  The  strife  be- 
tween trade-unions,  f  raternals,  and  profit-seeking  insurance 
corporations  has,  perhaps,  prolonged  the  difficulty  of  form- 
ing a  unified  public  policy.  One  great  difficulty  in  the  way 
of  obligatory  and  universal  insurance  lies  in  the  fact  that 
our  central  government  has  so  limited  constitutional  powers 
in  this  field,  ^  The  manufacturers  of  Massachusetts  opposed 
the  compensation  bill  proposed  in  their  legislature  on  the 
ground  that  it  would  handicap  them  in  competing  with 
manufacturers  of  other  states.  It  is  a  long  and  weary  way 
to  unified  and  harmonious  legislation  to  secure  it  by  con- 
ference and  agreement;  the  commissions  appointed  to 
promote  uniform  legislation  have  only  advisory  powers. 
There  is  no  prospect  that  a  constitutional  amendment  per- 
mitting Congress  to  enact  a  national  insurance  law  could 
be  secured.  Congress  has  already  exercised  its  constitu- 
tional powers  in  the  field  of  interstate  commerce  by  enacting 
rather  drastic  liability  law  for  railroads,  with  results  still 
in  question,  and  certainly  not  satisfactory  to  any  party  in- 
volved. Dr.  Zacher  (Heft  XVI  of  his  Arbeiterversicherung 
im  Auslande,  p.  6)  has  said  of  European  countries  what  is 
applicable  with  full  force  to  the  United  States: 

A  survey  of  the  tables  of  statistics  in  the  Guide  to  Workingmen's 
Insurance  in  the  German  Empire,  which  exhibits  the  plans  and  results  of 
industrial  insurance  in  European  countries,  shows  one  immediately 
that  those  lands  have  approached  most  nearly  the  ideal  of  care  for  all 
working  people  which  have  committed  themselves  to  compulsory  insur- 
ance. With  compulsory  insurance  laws  the  end  is  reached  in  a  com- 
paratively short  time;  while  even  with  state  subsidies  voluntary  plans 
have  failed  to  help  a  part  of  the  population  imperfectly  and  those 
who  most  need  the  protection  of  insurance  not  at  all. 

Our  problem  is  essentially  the  legal  question:  how  can 
we  introduce  obligatory  insurance  in  this  country  without 


312  INDUSTRIAL  INSURANCE 

conflict  with  our  written  constitutions  and  with  the  tradi- 
tions of  the  courts? 

The  problems  of  organization  and  administration  might 
be  difficult,  but  they  would  not  be  insoluble  if  the  legal  way 
could  be  opened.  As  all  acknowledge,  American  institutions 
have  shown  a  wonderful  power  to  adapt  themselves  to  new 
social  demands  and  the  inventive  talent  of  the  people  goes 
into  administration.  Life  in  contact  with  nature  made  the 
pioneers  ready  to  confront  new  situations  without  much 
regard  for  unfit  precedents,  and  their  spirit  is  not  dead. 
As  for  courts,  we  have  in  the  county  courts,  whose  judges 
are  chosen  directly  by  the  people,  a  popular,  fair,  trusted, 
and  capable  agency  for  deciding  many  of  the  questions  which 
would  arise  in  the  interpretation  and  application  of  a  new 
law.  Their  records  would  have  public  faith  and  their 
quarters  would  be  convenient  for  the  archives  of  agree- 
ments and  statistics.  Our  experience  with  the  new  juvenile 
courts  proves  that  our  judiciary  can  easily  rise  above  the 
routine  of  meaningless  procedure  when  occasion  requires 
and  their  hands  are  free.  From  early  times  various  public 
duties  have  been  assigned  to  local  courts,  as  supervision  of 
prisons  and  jails,  poorhouses,  and  semi-philanthropic  func- 
tions; and  it  would  not  be  an  absolute  novelty  if  they  were 
given  some-  supervision  over  the  judicial  management  of 
insurance  business  requiring  regularity  and  legal  instruc- 
tion. A  rational  insurance  law  would  clear  the  dockets  of 
a  vast  amount  of  hopelessly  confusing  damage  suits  and 
make  room  for  the  far  more  satisfactory  and  easy  business 
of  mediating  without  process  in  applying  the  principles  of 
insurance.  This  would  be  a  noble  social  function  for 
judges. 

Each  state  has  already  its  insurance  department  which 
has  supervisory  and  even  administrative  powers  within  state 
limits.  The  commissioners  are  supposed  to  be  insurance 


SURVEY  AND  OUTLOOK  313 

experts,  or  to  employ  experts,  and  they  have  annual  con- 
ferences and  constant  correspondence  in  relation  to  uniform 
methods  of  inspection  and  control.  Every  insurance  com- 
pany must  now  render  reports  to  this  insurance  department, 
and  it  would  be  merely  an  extension  of  such  departments 
if  they  were  to  be  intrusted  with  collecting  statistics  about 
accidents,  industrial  diseases,  fraternities,  decisions  of  lia- 
bility suits,  and  all  schemes  of  compulsory  industrial 
insurance.  This  department  could  also  act,  if  necessary,  as 
the  depository  of  reserve  funds,  as  it  already  does  in  case 
of  certain  insurance  corporations  whose  principal  office  is 
outside  the  state. 

The  subject  of  industrial  insurance  has  long  been  dis- 
cussed as  a  burning  question  among  charity  workers. 
Visitors  among  the  poor,  residents  of  social  settlements, 
officers  of  relief  societies  could  not  fail  to  discover  that 
thousands  of  families  fall  a  burden  upon  charity,  a  burden 
too  heavy  for  their  funds,  in  consequence  of  the  disability 
or  death  of  workingmen  on  whom  the  families  were  de- 
pendent. Even  if  the  charitable  societies  could  raise  enough 
money  to  meet  the  need  the  distribution  of  charity  would  be 
humiliating  and  degrading  on  a  vast  scale.  It  is  also  the 
intelligent  charity  visitor  who  discovers  the  frightful  cost 
and  the  entire  inadequacy  of  existing  methods  of  trying 
to  provide  benefits  through  the  agencies  described  above. 
Those  who  have  organized  the  movement  to  combat  tuber- 
culosis have  come  upon  the  discovery  that  industrial  insur- 
ance is  the  only  method  thus  far  devised  for  providing  a 
fund  for  the  care  of  the  afflicted  and  for  establishing 
preventive  means  on  a  large  foundation  (thus  Dr.  A.  C. 
Klebs,  medical  director  of  the  Chicago  Anti-Tuberculosis 
Society,  article  in  American  Journal  of  Sociology,  Septem- 
ber, 1906).  The  National  Conference  of  Charities  and 
Correction,  which  counts  among  its  members  representa- 


314  INDUSTRIAL  INSURANCE 

tives  of  all  forms  of  philanthropic  enterprises,  in  the  year 
1901  appointed  a  committee  to  study  and  report  on  the 
methods  of  industrial  insurance  in  this  country  and  abroad, 
with  a  view  to  educating  public  sentiment  on  the  subject. 
This  committee  made  reports  which  may  be  found  in  the 
proceedings  for  1905  and  1906,  and  the  subject  was  so 
deeply  interesting  to  the  members  that  the  same  committee 
was  kept  in  existence  and  requested  to  follow  the  subject 
in  future  reports.  Various  charity  organizations  have  made 
local  investigations  into  the  extent  and  causes  of  poverty 
due  to  accidents  and  diseases  of  industries,  and  in  publishing 
the  results  in  the  magazine,  Charities  and  Commons,  have 
urged  the  necessity  of  protection  through  some  form  of 
insurance. 

We  may  describe  the  actual  situation  in  a  typical  city 
with  large  industrial  population  in  order  to  set  forth  the 
facts  in  more  concrete  form.1 

Michigan  City  is  a  rapidly  growing  manufacturing  town 
of  Indiana,  situated  on  the  Indiana  port  of  Lake  Michigan, 
and  near  to  Chicago.  The  population  is  composed  chiefly 
of  workingmen  and  their  families,  German,  Scandinavian, 
Slavic,  and  Italian.  The  Barker  Car  Works  employ  2,500 
men;  the  Ford  and  Johnson  Chair  Factories  employ  1,200 
men  and  boys.  There  are  many  women  wage-earners  in 
small  factories.  There  are  about  500  railroad  employees. 
Mr.  Bill  found  four  classes  of  beneficiary  associations: 
fraternal  life  insurance  orders,  fraternal  benefit  orders  not 
furnishing  life  insurance,  parish  mutual  benefit  societies, 
and  workingmen's  mutual  benefit  societies.  He  also  found 
casualty  companies  and  burial  benefit  companies  ("indus- 
trial insurance"),  (i)  Fraternal  societies  or  orders  furn- 
ishing life  insurance  are  governed  by  state  laws.  In 

1  The  facts  are  furnished  from  a  yet  unpublished  paper  of  Mr.  Ingram 
E.  Bill,  Jr. 


SURVEY  AND  OUTLOOK  315 

this  town  20  orders  are  represented  by  26  lodges.  The 
membership  of  each  lodge  varies  from  15  to  300;  the 
majority  having  75  to  150.  Inquiry  was  made  to  discover 
the  ratio  of  wage-earners  in  the  membership.  In  one  lodge 
of  the  Maccabees,  with  a  membership  of  300,  60  were  busi- 
ness men,  12  farmers,  9  professional,  219  skilled  workmen 
with  good  wages.  In  a  lodge  of  the  North  American  Union 
having  297  members,  over  50  were  laborers,  earning  not 
more  than  $2  a  day.  A  lodge  of  the  Modern  Woodmen, 
with  a  membership  of  210,  had  193  wage-earners,  80  per 
cent,  of  whom  receive  $1.50  to  $2  per  day.  In  a  lodge  of 
the  Royal  Arcanum,  generally  regarded  as  a  strong  and 
safe  order,  75  per  cent,  were  workmen,  and  20  per  cent, 
of  all  did  not  earn  more  than  $2  per  day.  In  the  lodges 
composed  of  women  nearly  all  lived  upon  wages.  (2)  The 
fraternal  orders  which  do  not  furnish  life  insurance,  but 
only  sickness,  accident,  and  funeral  benefits,  are  not  so 
numerous  or  strong  as  the  others  just  described.  In  the 
Odd  Fellows  lodges,  about  75  per  cent,  are  wage-earners. 
In  sickness  they  pay  $4  a  week  benefits  and  $1.50  a  day  for 
nurse  hire;  the  funeral  benfit  is  $100.  The  Order  of  Eagles 
is  composed  chiefly  of  artisans  and  professional  men;  few 
are  low-paid  laborers.  The  dues  are  50  cents  a  month ;  the 
sick  benefits  $5  a  week,  for  13  weeks;  and  the  funeral  benefit 
is  $100.  The  Order  of  Mutual  Protection,  the  North 
American  Union,  and  the  Foresters  provide  a  permanent 
disability  benefit  which  is  10  per  cent,  annually  of  the 
amount  of  the  death  benefit.  (3)  In  one  factory  with  600 
to  700  employees  there  is  a  mutual  benefit  society  with  about 
350  members.  The  members  must  be  over  14  years  of  age 
and  under  45,  in  good  health  and  of  moral  character.  The 
dues  are  90  cents  a  quarter;  in  case  of  disability  due  to 
accident  or  sickness  a  weekly  benefit  of  $5  is  paid  for  16 
weeks.  The  employers  are  said  to  contribute  to  this  society, 


316  INDUSTRIAL  INSURANCE 

but  no  definite  amount  is  mentioned.  Wages  are  usually 
under  $2  a  day.  (4)  In  the  Catholic  and  Lutheran  parishes 
aid  societies  exist.  The  St.  John's  German  Lutheran 
society  was  founded  in  1855;  has  260  members,  mostly 
workingmen.  The  dues  are  $6  a  year;  the  benefits  during 
disability  from  accident  or  sickness  are  $8  a  week;  death 
benefit,  $800. 

The  immigrants  more  recently  arrived,  as  the  Italians, 
Syrians,  and  Turks,  have  not  yet  established  mutual  benefit 
societies.  Among  these  the  industrial  companies  send 
energetic  agents  who  collect  large  sums  in  the  aggregate  for 
high  premiums ;  but  the  burial  benefits  are  meager. 

GENERAL   CONCLUSIONS  IN   RELATION  TO  EACH   METHOD   OF 

INSURANCE 

Sickness  insurance. — The  present  organs  of  sickness 
insurance  are:  local  mutual  benefit  societies,  lodges  of  the 
trade-unions  and  fraternal  societies,  relief  departments  of 
railroads,  and  casualty  companies.  Naturally  this  form  of 
insurance  is  most  widely  developed  among  the  workmen  of 
cities.  Everywhere  the  organization  is  voluntary,  unless  we 
may  speak  of  constraint  to  enter  the  relief  departments  and 
other  similar  arrangements  as  a  condition  of  employment 
as  compulsion.  The  local  societies  are  seldom  united  in 
groups,  and  each  bears  its  burden  alone.  Central  direction 
and  supervision  by  the  state  are  unknown.  The  lodges  of 
the  fraternal  societies  and  of  some  of  the  trade-unions  work 
under  control  from  a  central  legislature.  The  administra- 
tion of  the  relief  departments  is  in  the  hands  of  committees 
representing  both  employers  and  employees.  Those  who 
simulate  sickness  are  discovered  by  medical  examination, 
or  by  visits  of  committees.  None  of  these  agencies  rests  on  a 
strictly  scientific  basis  approved  by  actuaries.  Even  the  rates 
of  the  insurance  companies  rest  chiefly  on  empirical  founda- 


SURVEY  AND  OUTLOOK  317 

tions,  may  be  changed  at  any  time,  and  are  determined 
largely  by  competition.  Frequently  the  companies  regard 
each  other  with  such  suspicion  that  a  common  registration 
is  said  to  be  impossible;  a  fact  much  to  be  regretted,  since 
a  comparison  of  experience  would  aid  in  giving  the  move- 
ment the  light  of  the  widest  and  most  varied  experience. 
For  the  settlement  of  disputes  between  members  and  the 
directors,  or  between  holders  and  companies,  the  courts  are 
open;  but  this  is  a  way  too  costly  and  tedious  to  be  taken 
into  consideration.  It  would  be  one  of  the  advantages  of 
compulsory  insurance  that  the  state  could  provide  a  simple 
and  inexpensive  arrangement  for  hearing  and  deciding  cases 
impartially. 

Accident  insurance. — The  employers'  liability  law 
remains  in  its  ancient  limits;  it  is  behind  the  British  com- 
pensation act  of  1897  and  much  farther  behind  the  German 
insurance  law  of  1884.  The  principle  that  social  care  in  any 
explicit  way  is  a  duty  of  the  community  has  never  been 
openly  recognized.  The  injured  man  stands  at  once  over 
against  his  employer  as  an  enemy  seeking  damages  even  of 
a  punitive  character.  Before  he  can  recover  damages  he 
must  prove,  with  the  presumption  against  him,  that  the 
injury  can  be  traced  to  the  negligence  of  the  employer  and 
is  actually  due  to  such  negligence.  Compulsory  insurance 
or  even  compensation  is  not  a  part  of  the  legal  provisions. 
Voluntary  organizations,  fragmentary  and  unfair  in  char- 
acter, are  further  developed  with  the  railroads  than  else- 
where. In  agriculture  there  is  hardly  a  discoverable  attempt 
in  this  direction.2 

2  And  yet  agriculture  bids  fair  to  be  reckoned  among  dangerous  trades ; 
the  introduction  of  steam-driven  machinery  increases  accidents.  Bailey, 
Modern  Social  Conditions,  pp.  247,  291,  citing  Twelfth  Census  of  U.  S., 
1902,  Vol.  Ill,  p.  262  ff. ;  Zacher,  Arbeiterversicherung  im  Auslande, 
Heft  XVI,  p.  18;  Handworterbuch  der  Staatswissenschaften,  Bd.  VII,  p. 
260,  "Unfallstatistik." 


318  INDUSTRIAL  INSURANCE 

The  railroads  have  generally  sought  to  insure  their  em- 
ployees either  through  agreements  with  casualty  companies 
or  by  relief  departments ;  but  the  employees  must  carry  the 
greater  part  of  the  burden.  The  employers  in  other  dan- 
gerous trades  have  often  organized  accident  insurance,  but 
generally  the  schemes  load  the  employees  with  premiums, 
cover  only  a  part  of  the  real  loss,  and  lack  full  actuarial 
basis.  There  is  nowhere  state  supervision,  or  direction,  no 
obligation  to  insure,  no  unity  or  uniformity  of  method; 
mostly  anarchy.  The  administration  varies  with  the  form 
of  organization :  in  the  mutual  benefit  associations  the  matter 
is  directed  by  a  committee  with  officers  and  clerks;  in  the 
trade-unions  the  lodge  governs  the  direction ;  and  in  casualty 
companies  all  is  administered  by  the  central  office. 

In  relation  to  'the  two  methods  of  paying  benefits  and 
indemnities  it  may  safely  be  said  that  American  practice  is 
at  variance  with  the  judgment  of  many  men  of  experience. 
The  temptation  to  squander  a  lump  sum  when  indemnity 
is  so  paid  is  very  great.  Not  much  is  left  of  a  little 
fortune  after  a  few  months.  Payment  by  instalments  would 
seem  to  be  far  better  except  in  rare  instances.  But  the 
general  custom  of  casualty  companies,  of  employers'  asso- 
ciations, and  of  courts  is  to  settle  a  case  of  death  or  total 
disability  as  soon  as  possible  by  payment  of  a  sum  agreed 
upon  by  compromise.  The  relief  departments,  however, 
for  temporary  disability,  pay  a  certain  sum  by  the  week  or 
month  during  the  period  of  need,  and  this  is  true  of  casualty 
companies. 

Payment  of  income  of  funds. — In  the  relief  departments 
of  railroads  and  in  the  casualty  companies  the  fund  is  pro- 
vided by  payment  of  premiums  at  intervals  in  advance.  No 
example  has  been  found  of  groups  of  employers  federated  to 
provide  accident  insurance ;  and,  indeed,  the  motive  is  lacking 
for  such  organization.  It  is  significant  that  employers  have 


SURVEY  AND  OUTLOOK  319 

organized  such  associations  for  fire  insurance,  in  competi- 
tion with  the  companies,  and  these  seem  to  have  worked 
well.  The  assessment  plan  of  payment  is  customary  in  some 
life  insurance  companies,  in  fraternal  societies,  and  in 
trade-unions,  certain  sums  being  levied  at  a  death  or  at 
intervals  during  the  year.  In  settlement  of  disputes  we  have 
only  contracts,  conferences,  and,  in  the  last  resort,  the  law 
suit. 

Old  age  and  invalidism. — A  few  of  the  trade-unions 
have  begun  to  establish  funds  for  old-age  retirement  bene- 
fits. The  fraternal  societies  exhibit  a  serious  defect  at  this 
point,  tinder  their  system  they  can  carry  life  insurance 
only  to  the  region  of  old  age  and  then  the  "brother"  must 
care  for  himself,  a  very  inconsistent  kind  of  fraternity,  yet 
inseparable  from  present  methods.  The  Mutualists  of 
France  have  gone  much  farther  in  meeting  this  difficulty 
by  establishing  funds  for  old  age  and  invalidism.  Some  of 
the  railroad  corporations  and  even  private  firms  have 
founded  funds  for  old-age  pensions  and  this  movement 
seems  to  be  growing  in  the  country.  Cities  have  pension 
funds  for  policemen,  firemen,  and  to  some  extent  for  teach- 
ers. The  nation  and  the  states  have  made  the  old  age  of 
veterans  comfortable.  It  is  perfectly  clear  that  the  common 
laborers  of  cities  can  never  on  present  wages  provide  for 
old  age  without  help  of  employers  and  the  public;  the  out- 
look is  simply  hopeless.  The  income  of  the  workingmen  of 
cities  is  too  small  and  too  irregular  to  warrant  any  unaided 
attempt  to  provide  for  the  last  period  of  life.  In  the  United 
States  there  is  no  example  even  of  state  subsidies  to  en- 
courage voluntary  associations,  as  in  France  and  in  Belgium. 
Powerful  and  wealthy  corporations,  as  railroads,  canals, 
ship  builders,  have  not  been  above  asking  the  government 
for  subsidies  to  aid  "infant  industries,"  even  when  those 
industries  have  become  aged  and  corpulent,  but  they  would 


320  INDUSTRIAL  INSURANCE 

brand  any  attempt  to  subsidize  old-age  funds  for  working- 
men  as  rank  "socialism." 

Mr.  Frederick  L.  Hoffman3  argues  against  state  pen- 
sions on  grounds  usually  urged  by  opponents  of  advanced 
social  legislation.  He  makes  an  estimate  of  the  cost  of  a 
state  old-age  pension  system : 

Upon  the  basis  of  a  careful  estimate  for  January  i,  1908,  the  popu- 
lation of  the  United  States  aged  60  and  over  is  5,512,704,  aged  65  and 

over  3,531,576,   and  aged  70  and  over   1,981,128 Adopting  the 

estimate  of  a  British  Departmental  Committee,  that  at  ages  65  and 
over  32.4  per  cent,  would  be  entitled  to  pensions,  the  numbers  pension- 
able in  the  United  States  at  that  age  would  be  1,144,230 

Assuming  as  a  minimum  a  pension  of  $5.00  a  week,  as  the  lowest 
amount  at  which  support  could  be  obtained,  in  conformity  to  the 
American  standard  of  living,  the  annual  cost  to  provide  a  pension  of 
this  amount  for  the  probable  number  of  aged  poor  at  ages  65  and 

over  throughout  the  country  would  be  $297,499,800 If  the  age 

were  reduced  to  60,  the  corresponding  amount  would  be  $464,390,160 

per  annum  for  the  United  States If  the  pension  age  were  placed 

at  age  70,  the  amount  would  be  $166,890,100  per  annum  for  the 
United  States. 

Mr.  Hoffman  would  provide  guarantees  in  old  age  by 
security  for  their  investments,  by  voluntary  savings  and 
insurance,  by  reliance  on  filial  piety,  and  by  such  modifica- 
tions of  employers'  liability  laws  as  would  make  each  trade 
carry  the  cost  of  the  injury  it  inflicts  by  accident  or  disease. 
As  to  the  possibility  of  providing  for  old  age  by  an- 
nuities paid  for  out  of  wages,  he  says : 

Insurance  could  do  much,  if  not  most,  to  provide  the  necessary 
means  of  self-support  in  old  age.  The  rational  expenditures  of  the 
weekly  income  of  American  wage-earners  should  leave  a  sufficient 
margin  to  pay  the  premiums  for  an  annuity  beginning  with  age  60  or 
65,  according  to  circumstances  and  conditions,  sufficient  to  meet 
reasonable  needs  in  old  age.  If  but  5  per  cent,  of  the  average  income 

3  Proceedings  of  National  Conference  of  Charities  and  Correction, 
1908. 


SURVEY  AND  OUTLOOK  321 

is  paid  out  for  insurance  premiums,  a  sufficient  sum  can  be  secured 
which  will  provide  as  much,  if  not  more,  than  the  state  can  ever  pay 
even  under  the  most  liberal  system  of  old-age  pensions.  Let  us  take, 
for  illustration,  an  income  of  $900  per  annum,  5  per  cent,  of  which 
is  $45;  commencing  with  the  age  30  and  continuing  to  age  65,  this 
sum  paid  to  a  responsible  insurance  company  will  purchase  an  annuity 
of  $454.09  per  annum  for  a  man,  and  of  $375.03  per  annum  for  a 
woman.  Or,  to  put  the  matter  in  another  way,  let  a  man  begin  at  the 
age  of  30  to  pay  annually  $42.65  and  he  will  be  entitled  to  receive  an 
annuity  of  $250  per  annum  for  the  remainder  of  his  life,  beginning 
at  age  60;  or,  if  he  prefers,  it  will  cost  him  only  $24.78  per  annum 
to  secure  such  an  annuity,  beginning  with  age  65.  In  the  case  of 
women  the  cost  is  somewhat  greater  on  account  cf  the  superior  expec- 
tation of  life  of  women  in  old  age.  Let  us  suppose  that  the  man  is 
not  able  to  commence  at  age  30,  but  that  he  begins  to  make  his 
periodical  payments  at  age  40,  and  continues  for  25  years,  then  the 
cost  of  an  annuity  of  $250  per  annum  will  be  $45.50  a  year,  or  6.50 
per  cent,  of  an  income  of  $700,  or  5.05  per  cent,  of  an  income  of  $900, 
or  3-79  per  cent,  of  an  income  of  $1,200  per  annum.  These  calcula- 
tions are  upon  the  usual  plan  of  selling  deferred  annuities,  and,  of 
course,  if  death  should  occur  during  the  intervening  period  the  pay- 
ments made  would  be  forfeited,  or  accrue  to  the  benefit  of  surviving 
co-contributors  to  the  fund.  Of  course,  the  earlier  in  life  the  periodi- 
cal payments  begin,  the  smaller  the  amount  required  to  be  paid.  Many 
other  plans  have  been  devised  by  which  joint  annuities  can  be  pur- 
chased. A  continuous  instalment  policy,  for  illustration,  provides  for 
the  surviving  wife  in  the  event  of  the  husband's  death  for  the 
remainder  of  her  life,  or  for  the  needs  of  children  for  a  period  of 
twenty  years. 

It  is  a  question  of  historical  fact  whether  there  is  any 
reasonable  ground  for  expectation  that  the  wage-earners 
either  can  or  will  take  advantage  of  these  methods.  Some 
light  on  this  matter  is  given  in  the  first  chapter  of  this  series 
in  which  such  data  as  exist  have  been  studied.  In  other 
places  Mr.  Hoffman  himself  does  not  take  an  optimistic 
attitude.  Thus  in  his  paper  before  the  New  York  State 
Conference  of  Charities  and  Correction,  in  1901,  he  says: 

It  is  absolutely  impossible  at  the  present  rate  of  wages,  and  at  the 


322  INDUSTRIAL  INSURANCE 

present  cost  of  living,  for  a  workingman  to  save  a  sum  sufficient  to  do 

away  with  all  the  social  and  economic  misery  of  modern  life 

The  wages  received  by  the  average  man  are  insufficient  and  will  remain 
insufficient  for  many  years  to  come  to  meet  all  the  requirements  which 
a  healthy  and  happy  social  life  imposes  upon  him.4 

Since  sickness  is  always  a  remote  contingency,  the  sur- 
plus earnings  will  be  devoted  to  other  purposes  for  the  time 
being,  rather  than  put  aside  for  a  possible  occurrence  which, 
however,  may  never  take  place.  (See  also  a  paper  by  the 
writer,  on  "Sickness  and  Invalid  Insurance  in  Relation  to 
Tuberculosis,"  International  Tuberculosis  Congress,  1908, 
Washington. ) 

Various  are  the  methods  of  providing  funeral  funds  and 
life  insurance.  The  poorest  workmen  of  America  count 
among  their  most  necessary  expenses  the  premiums  which 
will  provide  money  for  a  respectable  funeral.  Sickness  and 
accident  insurance  come  later,  and  the  contingency  of  need 
in  old  age  is  to  their  imagination  far  more  remote.  The 
colossal  sums  poured  annually  from  slender  incomes  into 
the  coffers  of  the  "industrial  insurance"  companies  are 
witness  of  the  spirit  of  sacrifice  which  is  inspired  by  the 
sentiment  of  repugnance  to  burial  at  public  expense.  The 
benefit  departments  of  the  fraternal  societies  and  fraternal 
insurance  societies  prove  the  interest  of  skilled  artisans  in 
providing  for  future  want  by  insurance. 

Comparatively  little  has  been  done  for  unemployment 
insurance.  Apart  from  occasional  gifts  of  cities,  or  hastily 
planned  emergency  works,  the  public  has  manifested  no 
interest  in  this  burning  question.  During  the  past  years 
of  unexampled  and  long-continued  prosperity  the  occasion 
for  such  insurance  has  not  been  so  clear  as  it  would  be  in  a 
period  of  depression.  Of  the  trade-union  methods  of  deal- 
ing with  those  out  of  work  we  have  already  spoken. 

*  Proceedings,  pp.  273,  274. 


APPENDIX  A 
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RUBINOW,    I.    M. :      "Compulsory    State    Insurance    of    Workingmen," 

Annals  of  American  Academy  of  Political  and  Social  Science,  Vol. 

XXIV,    September,    1904,    pp.    331-42    (cf.    Journal    of    Political 

Economy,  Vol.  XII,  January,  1904,  pp.  362-81). 
SCOTT,  EDSON  S. :   "Accident  Insurance,"  Annals  of  American  Academy, 

Vol.  XXVI,  1905,  p.  483. 

STIMSON,  F.  J. :    Handbook  to  the  Labor  Law  of  the  U.  S.,  1895. 
United   States   Civil   Service   Commission,   Eighteenth  Annual   Report, 

1901,  p.  150;  Twentieth  Report,  1902,  pp.  183-87. 
United  States,  Department  of  Labor,  1904,  10.     Special  Report,  Labor 

Laws  of  the  U.  S. 
VANDERLIP,  F.  A. :     "Insurance   for   Workingmen,"   North  American 

Review,  Vol.  CLXXXI,  December,  1905,  pp.  921-32. 
v.  WALTERSHAUSEN,  A.   SARTORIUS,  FREIHERR:  "Das  Hilfskassenwesen 

in  Nord-Amerika,"  Jahrb.  f.  Nat.-Oekon,  u.  Stat.,  Bd.  XLV  (N.  F. 

10),  1885. 


326  INDUSTRIAL  INSURANCE 

WAUDBY,  W.  S. :  Mutual  Relief  and  Benefit  Associations  in  the  Print- 
ing Trade,  U.  S.  Department  of  Labor,  Bulletin  No.  19,  1898,  pp. 
829-51. 

WEBER,  ADNA  F. :  "Accident  Insurance,"  Political  Science  Quarterly, 
Vol.  XVII,  1902,  pp.  256^83- 

WEBER,  GUSTAVUS  A. :  "Workingmen's  Insurance  in  the  United  States," 
Internationaler  Arbeiter-Versicherungs-Congress,  1902,  Dusseldorf, 
pp.  617-42. 

WILLOUGHBY,  W.  F. :     Workingmen's  Insurance,  1898. 

:  "Unemployment  and  Trades  Unions,"  Commons  (J.  R.  ed.)  ; 

Trade  Unionism  (cf.  Political  Science  Quarterly,  Vol.  XII,  1897, 
P-  476). 

WRIGHT,  C.  D. :     Practical  Sociology,  1899,  p.  270. 

ZACHER,  G. :  "Die  Arbeiterversicherung  auf  der  Weltausstellung  in 
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:  "Leitfaden  zur  Arbeiterversicherung  des  Deutschen  Reichs," 

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(deutsch.  engl.,  franzosisch),  Berlin,  1904;  n.  Ausg.,  Berlin,  1906; 
13.  Ausgabe,  Berlin,  1908. 


APPENDIX  B 1 

COMMON  CARRIERS'  LIABILITY  LAW 
[H.  R.  20310.] 

An  Act  Relating  to  the  liability  of  common  carriers  by  railroad  to  their 
employees  in  certain  cases. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled:  That  every  common 
carrier  by  railroad  while  engaging  in  commerce  between  any  of  the 
several  States  or  Territories,  or  between  any  of  the  States  and  Terri- 
tories, or  between  the  District  of  Columbia  and  any  of  the  States  or 
Territories,  or  between  the  District  of  Columbia  or  any  of  the  States 
or  Territories  and  any  foreign  nation  or  nations,  shall  be  liable  in 
damages  to  any  person  suffering  injury  while  he  is  employed  by  such 
carrier  in  such  commerce,  or,  in  case  of  the  death  of  such  employee, 
to  his  or  her  personal  representative,  for  the  benefit  of  the  surviving 
widow  or  husband  and  children  of  such  employee;  and,  if  none,  then 
of  such  employee's  parents;  and,  if  none,  then  of  the  next  of  kin 
dependent  upon  such  employee,  for  such  injury  or  death  resulting  in 
whole  or  in  part  from  the  negligence  of  any  of  the  officers,  agents,  or 
employees  of  such  carrier,  or  by  reason  of  any  defect  or  insufficiency, 
due  to  its  negligence,  in  its  cars,  engines,  appliances,  machinery,  track, 
roadbed,  works,  boats,  wharves,  or  other  equipment. 

SEC.  2.  That  every  common  carrier  by  railroad  in  the  Territories, 
the  District  of  Columbia,  the  Panama  Canal  Zone,  or  other  possessions 
cf  the  United  States  shall  be  liable  in  damages  to  any  person  suffering 
injury  while  he  is  employed  by  such  carrier  in  any  of  said  jurisdictions, 
or,  in  case  of  the  death  of  such  employee,  to  his  or  her  personal  repre- 
sentative, for  the  benefit  of  the  surviving  widow  or  husband  and  chil- 
dren of  such  employee;  and,  if  none,  then  of  such  employee's  parents; 
and,  if  none,  then  of  the  next  of  kin  dependent  upon  such  employee,  for 

1  The  common  carriers'  liability  law  of  1903  was  declared  unconstitu- 
tional by  the  Supreme  Court  on  January  6,  1908.  On  April  22,  1908, 
President  Roosevelt  approved  an  amended  form  of  the  law. 

The  printing  of  these  laws,  bills  and  plans  of  employers  in  this 
volume  does  not  carry  with  it  the  approval  of  the  author.  Criticisms  are 
found  in  the  text. — C.  R.  HENDERSON. 

327 


328  INDUSTRIAL  INSURANCE 

such  injury  or  death  resulting  in  whole  or  in  part  from  the  negligence 
of  any  of  the  officers,  agents,  or  employees  of  such  carrier,  or  by 
reason  of  any  defect  or  insufficiency,  due  to  its  negligence,  in  its  cars, 
engines,  appliances,  machinery,  track,  roadbed,  works,  boats,  wharves, 
or  other  equipment. 

SEC.  3.  That  in  all  actions  hereafter  brought  against  any  such  com- 
mon carrier  by  railroad  under  or  by  virtue  of  any  of  the  provisions  of 
this  Act  to  recover  damages  for  personal  injuries  to  an  employee,  or 
where  such  injuries  have  resulted  in  his  death,  the  fact  that  the 
employee  may  have  been  guilty  of  contributory  negligence  shall  not 
bar  a  recovery,  but  the  damages  shall  be  diminished  by  the  jury  in  pro- 
portion to  the  amount  of  negligence  attributable  to  such  employee: 
Provided,  That  no  such  employee  who  may  be  injured  or  killed  shall 
be  held  to  have  been  guilty  of  contributory  negligence  in  any  case 
where  the  violation  by  such  common  carrier  of  any  statute  enacted  for 
the  safety  of  employees  contributed  to  the  injury  or  death  of  such 
employee. 

SEC.  4.  That  in  any  action  brought  against  any  common  carrier 
under  or  by  virtue  of  any  of  the  provisions  of  this  Act  to  recover 
damages  for  injuries  to,  or  the  death  of,  any  of  its  employees,  such 
employee  shall  not  be  held  to  have  assumed  the  risks  of  his  employ- 
ment in  any  case  where  the  violation  by  such  common  carrier  of  any 
statute  enacted  for  the  safety  of  employees  contributed  to  the  injury 
or  death  of  such  employee. 

SEC.  5.  That  any  contract,  rule,  regulation,  or  device  whatsoever, 
the  purpose  or  intent  of  which  shall  be  to  enable  any  common  carrier 
to  exempt  itself  from  any  liability  created  by  this  Act,  shall  to  that 
extent  be  void:  Provided,  That  in  any  action  brought  against  any 
such  common  carrier  under  or  by  virtue  of  any  of  the  provisions  of 
this  Act,  such  common  carrier  may  set  off  therein  any  sum  it  has  con- 
tributed or  paid  to  any  insurance,  relief  benefit,  or  indemnity  that  may 
have  been  paid  to  the  injured  employee,  or  the  person  entitled  thereto, 
on  account  of  the  injury  or  death  for  which  said  action  was  brought.  > 

SEC.  6.  That  no  action  shall  be  maintained  under  this  Act  unless 
commenced  within  two  years  from  the  day  the  cause  of  action  accrued. 

SEC.  7.  That  the  term  "common  carrier"  as  used  in  this  Act  shall 
include  the  receiver  or  receivers  or  other  persons  or  corporations 
charged  with  the  duty  of  the  management  and  operation  of  the  busi- 
ness of  a  common  carrier. 

SEC.  8.  That  nothing  in  this  Act  shall  be  held  to  limit  the  duty  or 


APPENDICES  329 

liability  of  common  carriers  or  to  impair  the  rights  of  their  employees 
under  any  other  Act  or  Acts  of  Congress,  or  to  affect  the  prosecution 
of  any  pending  proceeding  or  right  of  action  under  the  Act  of  Con- 
gress entitled  "An  Act  relating  to  liability  of  common  carriers  in  the 
District  of  Columbia  and  Territories,  and  to  common  carriers  engaged 
in  commerce  between  the  States  and  between  the  States  and  foreign 
nations  to  their  employees,"  approved  June  eleventh,  nineteen  hundred 
and  six. 

Approved,  April  22,  1908. 


APPENDIX  C 

FEDERAL  COMPENSATION  LAW 

[H.  R.  21844.] 

An  Act  Granting  to  certain  employees  of  the  United  States  the  right  to 
receive  from  it  compensation  for  injuries  sustained  in  the  course  of 
their  employment. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled:  That  when,  on  or 
after  August  first,  nineteen  hundred  and  eight,  any  person  employed  by 
the  United  States  as  an  artisan  or  laborer  in  any  of  its  manufacturing 
establishments,  arsenals,  or  navy-yards,  or  in  the  construction  of  river 
and  harbor  or  fortification  work  or  in  hazardous  employment  on  con- 
struction work  in  the  reclamation  of  arid  lands  or  the  management 
and  control  of  the  same,  or  in  hazardous  employment  under  the  Isth- 
mian Canal  Commission,  is  injured  in  the  course  of  such  employment, 
such  employee  shall  be  entitled  to  receive  for  one  year  thereafter, 
unless  such  employee,  in  the  opinion  of  the  Secretary  of  Commerce 
and  Labor,  be  sooner  able  to  resume  work,  the  same  pay  as  if  he  con- 
tinued to  be  employed,  such  payment  to  be  made  under  such  regula- 
tions as  the  Secretary  of  Commerce  and  Labor  may  prescribe:  Pro- 
vided, That  no  compensation  shall  be  paid  under  this  Act  where  the 
injury  is  due  to  the  negligence  or  misconduct  of  the  employee  injured, 
nor  unless  said  injury  shall  continue  for  more  than  fifteen  days.  All 
questions  of  negligence  or  misconduct  shall  be  determined  by  the 
Secretary  of  Commerce  and  Labor. 

SEC.  2.  That  if  any  artisan  or  laborer  so  employed  shall  die  during 
the  said  year  by  reason  of  such  injury  received  in  the  course  of  such 
employment,  leaving  a  widow,  or  a  child  or  children  under  sixteen 
years  of  age,  or  a  dependent  parent,  such  widow  and  child  or  children 
and  dependent  parent  shall  be  entitled  to  receive,  in  such  portions  and 
under  such  regulations  as  the  Secretary  of  Commerce  and  Labor  may 
prescribe,  the  same  amount,  for  the  remainder  of  the  said  year,  that 
said  artisan  or  laborer  would  be  entitled  to  receive  as  pay  if  such 
employee  were  alive  and  continued  to  be  employed :  Provided,  That  if 
the  widow  shall  die  at  any  time  during  the  said  year  her  portion  of 

33° 


APPENDICES  331 

said  amount  shall  be  added  to  the  amount  to  be  paid  to  the  remaining 
beneficiaries  under  the  provisions  of  this  section,  if  there  be  any. 

SEC.  3.  That  whenever  an  accident  occurs  to  any  employee  embraced 
within  the  terms  of  the  first  section  of  this  Act,  and  which  results  in 
death  or  a  probable  incapacity  for  work,  it  shall  be  the  duty  of  the 
official  superior  of  such  employee  to  at  once  report  such  accident  and 
the  injury  resulting  therefrom  to  the  head  of  his  Bureau  or  inde- 
pendent office,  and  his  report  shall  be  immediately  communicated, 
through  regular  official  channels,  to  the  Secretary  of  Commerce  and 
Labor.  Such  report  shall  state,  first,  the  time,  cause,  and  nature  of  the 
accident  and  injury  and  the  probable  duration  of  the  injury  resulting 
therefrom ;  second,  whether  the  accident  arose  out  of  or  in  the  course 
of  the  injured  person's  employment;  third,  whether  the  accident  was 
due  to  negligence  or  misconduct  on  the  part  of  the  employee  injured; 
fourth,  any  other  matters  required  by  such  rules  and  regulations  as 
the  Secretary  of  Commerce  and  Labor  may  prescribe.  The  head  of 
each  Department  or  independent  office  shall  have  power,  however,  to 
charge  a  special  official  with  the  duty  of  making  such  reports. 

SEC.  4.  That  in  the  case  of  any  accident  which  shall  result  in 
death,  the  persons  entitled  to  compensation  under  this  Act  or  their 
legal  representatives  shall,  within  ninety  days  after  such  death,  file 
with  the  Secretary  of  Commerce  and  Labor  an  affidavit  setting  forth 
their  relationship  to  the  deceased  and  the  ground  of  their  claim  for 
compensation  under  the  provisions  of  this  Act.  This  shall  be  accom- 
panied by  the  certificate  of  the  attending  physician  setting  forth  the 
fact  and  cause  of  death,  or  the  non-production  of  the  certificate  shall 
be  satisfactorily  accounted  for.  In  the  case  of  incapacity  for  work 
lasting  more  than  fifteen  days,  the  injured  party  desiring  to  take  the 
benefit  of  this  Act  shall,  within  a  reasonable  period  after  the  expira- 
tion of  such  time,  file  with  his .  official  superior,  to  be  forwarded 
through  regular  official  channels  to  the  Secretary  of  Commerce  and 
Labor,  an  affidavit  setting  forth  the  grounds  of  his  claim  for  compen- 
sation, to  be  accompanied  by  a  certificate  of  the  attending  physician  as 
to  the  cause  and  nature  of  the  injury  and  probable  duration  of  the 
incapacity,  or  the  non-production  of  the  certificate  shall  be  satisfactorily 
accounted  for.  If  the  Secretary  of  Commerce  and  Labor  shall  find 
from  the  report  and  affidavit  or  other  evidence  produced  by  the  claim- 
ant or  his  or  her  legal  representatives,  or  from  such  additional  investi- 
gation as  the  Secretary  of  Commerce  and  Labor  may  direct,  that  a 
claim  for  compensation  is  established  under  this  Act,  the  compensation 


332  INDUSTRIAL  INSURANCE 

to  be  paid  shall  be  determined  as  provided  under  this  Act  and 
approved  for  payment  by  the  Secretary  of  Commerce  and  Labor. 

SEC.  5.  That  the  employee  shall,  whenever  and  as  often  as  required 
by  the  Secretary  of  Commerce  and  Labor,  at  least  once  in  six  months, 
submit  to  medical  examination,  to  be  provided  and  paid  for  under  the 
direction  of  the  Secretary,  and  if  such  employee  refuses  to  submit  to 
or  obstructs  such  examination  his  or  her  right  to  compensation  shall 
be  lost  for  the  period  covered  by  the  continuance  of  such  refusal  or 
obstruction. 

SEC.  6.  That  payments  under  this  Act  are  only  to  be  made  to  the 
beneficiaries  or  their  legal  representatives  other  than  assignees,  and 
shall  not  be  subject  to  the  claims  of  creditors. 

SEC.  7.  That  the  United  States  shall  not  exempt  itself  from  liability 
under  this  Act  by  any  contract,  agreement,  rule,  or  regulation,  and 
any  such  contract,  agreement,  rule,  or  regulation  shall  be  pro  tanto 
void. 

SEC.  8.  That  all  Acts  or  parts  of  Acts  in  conflict  herewith  or  pro- 
viding a  different  scale  of  compensation  or  otherwise  regulating  its 
payment  are  hereby  repealed. 

Approved,  May  30,  1908. 


APPENDIX  D 

BILL  CONSIDERED  BY  LEGISLATURE  OF  ILLINOIS1 
An   act   to   facilitate   the   insurance   of   employees   against  the   conse- 
quences of  accidents  resulting  in  personal  injury  or  death,  and  to  permit 
agreements    between    employers    and    employees    with    reference    to    such 
accidents. 

SECTION  i.  Be  it  enacted  by  the  People  of  the  State  of  Illinois, 
represented  in  the  General  Assembly:  That  it  shall  be  lawful  for 
any  employer  to  make  a  contract  in  writing  with  any  employee  whereby 
the  parties  may  agree  that  the  employee  shall  become  insured  against 
accident  occurring  in  the  course  of  employment  which  results  in  per- 
sonal injury  or  death,  in  accordance  with  the  provisions  of  this  act, 
and  that  in  consideration  of  such  insurance  the  employer  shall  be 
relieved  from  the  consequences  of  acts  or  omissions  by  reason  of 
which  he  would  without  such  contract  become  liable  toward  such 
employee  or  toward  the  legal  representative,  widow,  widower,  or  next 
of  kin  of  such  employee. 

SEC.  2.  Such  insurance  shall  be  effected  in  some  casualty  insurance 
company,  organized  under  the  laws  of  the  State  of  Illinois  or  admitted 
to  do  business  in  this  state,  provided  that  any  employer  employing 
not  less  than  fifteen  hundred  (1,500)  employees  may  establish  an 
insurance  fund  from  sums  contributed  by  himself  and  his  employees, 
upon  condition  that  he  undertake  and  agree  to  make  up  any  deficiency 
in  insurance  benefits  that  may  arise  out  of  the  inadequacy  of  such 
fund.  Such  fund  shall  be  inviolably  appropriated  as  a  trust  fund  for 
the  purposes  of  such  insurance,  and  shall  not  be  invested  otherwise 
than  in  acordance  with  the  provisions  of  sec.  14  of  an  act  to  provide 

1  This  bill  was  recommended  to  the  legislature  of  Illinois  by  the 
Industrial  Insurance  Commission  appointed  by  Governor  C.  S.  Deneen  in 
accordance  with  a  joint  resolution  of  the  legislature  of  Illinois,  May,  1905. 
The  bill  was  introduced  into  the  Senate  in  April,  1907,  and  was  discussed 
in  a  committee.  It  has  received  much  notice  and  commendation  from 
actuaries  and  the  Department  of  Commerce  and  Labor,  and  was  intro- 
duced into  the  legislature  of  New  York  in  1898.  An  account  of  its  intro- 
duction is  given  in  the  Proceedings  of  the  American  Economic  Association, 
1908.  Its  central  principle  is  embodied  in  the  Massachusetts  law  of  1908, 

333 


334  INDUSTRIAL  INSURANCE 

for  the  organization  of  mutual  insurance  corporations,  approved  May 
16,  1905.  Provision  shall  be  made  for  the  election  by  the  insured 
employees  of  an  advisory  committee  which  shall  be  kept  informed 
regarding  the  state  of  the  insurance  fund,  and  shall  have  the  right  to 
examine  the  books  kept  in  connection  therewith.  Such  books  shall 
also  be  subject  to  the  inspection  of  the  insurance  superintendent  of 
the  state  in  the  same  manner  as  the  books  of  insurance  companies 
doing  business  in  this  state. 

Upon  the  request  of  the  employer,  or  upon  the  request  of  the 
advisory  committee,  the  insurance  superintendent  shall  act  as  deposi- 
tary of  the  securities  in  which  any  such  fund  may  be  invested. 

If  any  employer  desires  to  discontinue  an  insurance  fund  main- 
tained by  him,  or  if  he  discontinues  his  business  without  transferring 
the  same  to  a  successor  or  assign,  taking  over  and  agreeing  to  main- 
tain such  fund,  he  shall  notify  the  insurance  superintendent  of  his 
purpose,  who  shall  thereupon  supervise  the  disposition  of  the  insur- 
ance fund.  Such  fund  shall  be  distributed  among  those  equitably 
entitled  to  it  according  to  their  contributions  (not  taking  into  con- 
sideration expenses  of  the  management),  and  where  those  entitled  to 
any  part  of  the  fund  cannot  be  discovered  or  ascertained,  the  moneys 
remaining  unclaimed  shall  be  paid  into  the  insurance  department  to  be 
held  and  disposed  of  as  may  be  provided  by  law.  The  insurance 
superintendent  shall  be  entitled  to  be  paid  out  of  such  fund  the  reason- 
able expenses  of  his  supervision,  including  a  compensation  not  to  exceed 
ten  dollars  per  day  for  the  time  of  any  person  or  persons  (other  than 
a  salaried  employee  of  his  office)  employed  by  him  for  the  purpose 
of  such  supervision  necessarily  spent  in  connection  therewith. 

SEC.  3.  Such  insurance  shall  cover  the  risk  of  personal  injury  by 
accident  arising  out  of  and  in  course  of  the  employment,  resulting  in 
death,  provided  death  occur  within  twelve  months  from  the  time  of 
such  injury,  or  resulting  in  disability,  whether  the  same  be  total  or 
partial,  permanent  or  temporary. 

SEC.  4.  The  insurance  in  case  of  death  shall  be  for  the  benefit  of 
such  persons,  being  the  widow,  widower,  father,  mother,  grandfather, 
grandmother,  stepfather,  stepmother,  son,  daughter,  grandson,  grand- 
daughter, stepson,  stepdaughter,  brother,  sister,  half-brother,  or  half- 
sister,  as  are  dependent  wholly  or  in  part  for  their  support  upon  the 
earnings  of  such  employee  (all  of  which  persons  are  hereinafter  desig- 
nated as  dependents  of  such  employee),  or  of  such  of  them  as  may  be 
named  in  the  contract  or  the  policy  to  which  it  refers  and  the  persons 


APPENDICES  335 

for  whose  benefit  such  insurance  is  made  shall  be  bound  by  the  agree- 
ment authorized  by  the  first  section  of  this  act. 

SEC.  5.  In  order  to  satisfy  the  requirements  of  this  act  the  benefits 
payable  under  such  insurance  shall  be  at  least  as  follows : 

(i)  In  case  of  death. 

(a)  If  the  employee  insures  for  the  benefit  of  any  dependents 
wholly  dependent  upon  his  wages  at  the  time  of  his  death,  a  sum  equal 
to  his  wages  in  the  employment  of  said  employer  during  a  period  of 
three  years  next  preceding  the  accident,  but  not  less,  in  any  case, 
than  the  sum  of  one  thousand  dollars,  provided  that  the  amount  of 
any  weekly  payments  made  .under  such  insurance  or  any  lump  sum 
paid  in  redemption  thereof  may  be  deducted  from  such  sum,  and  if 
the  period  of  the  employee's  employment  by  said  employer  has  been 
less  than  said  three  years,  then  the  amount  of  his  earnings  during  the 
said  three  years  shall  be  deemed  to  be  one  hundred  and  fifty-six  times 
his  average  weekly  earnings  during  the  period  of  his  actual  employ- 
ment by  said  employer. 

(6)  If  the  employee  insures  for  the  benefit  only  of  persons  partly 
dependent  upon  his  wages  at  the  time  of  his  death,  then  a  sum  equal 
to  the  payments  provided  for  the  benefit  of  persons  wholly  dependent, 
less  six  times  the  average  annual  earnings,  or  if  employed  for  less 
than  a  year,  then  less  three  hundred  times  the  average  weekly  earn- 
ings of  the  said  dependent  person  or  persons  partly  dependent  on  his 
wages. 

(c)  If  the  employee  leaves  no  dependents,  then  the  reasonable 
expenses  of  his  medical  attendance  shall  be  paid;  and  in  addition, 
burial  expenses  not  less  than  $75  nor  more  than  $100  shall  be  paid. 

And  the  contract  or  the  policy  therein  referred  to  may  provide  for 
the  payment,  instead  of  a  lump  sum,  of  a  weekly  sum  which  in  the 
case  of  persons  wholly  dependent,  shall  not  be  less  than  the  weekly 
payment  in  case  of  total  disability  hereinafter  provided  for,  and 
which,  in  the  case  of  persons  partly  dependent,  shall  not  be  less  than 
the  weekly  payment  in  case  of  total  disability,  less  the  amounts  earned 
by  the  persons  partly  dependent,  and  which  sum  may  be  divided  between 
the  dependents  in  such  manner  as  such  contract  or  policy  may  provide 
or  as  may  otherwise  be  agreed  upon;  or  such  contract  or  policy  may 
provide  for  a  combination  of  lump  sums  and  weekly  payments,  or  for 
the  substitution  of  one  for  the  other. 

(ii)  In  case  of  injury  not  resulting  in  death,  where  total  disability 
results  from  the  injury,  a  weekly  payment  during  the  period  of  such 


336  INDUSTRIAL  INSURANCE 

disability  shall  be  paid  to  the  insured,  which  shall  not  be  less  than 
50  per  cent,  of  his  average  weekly  wages  during  the  previous  twelve 
months,  if  he  has  been  so  long  employed  by  the  contracting  employer; 
if  not,  then  a  weekly  benefit  during  the  period  of  such  disability  which 
shall  not  be  less  than  50  per  cent,  of  his  average  weekly  wages  during 
such  shorter  period  as  he  has  been  in  the  employment  of  said 
employer. 

(iii)  In  case  of  injury  not  resulting  in  death,  where  partial  disa- 
bility results,  such  weekly  payment  shall  be  made  during  the  period  of 
such  partial  disability  as  is  equal  to  the  difference  between  the  weekly 
benefit  payment  during  the  period  of  total  disability  and  the  average 
amount  which  the  injured  person  is  able  to  earn  after  the  accident. 
Loss  by  actual  separation  at  or  above  the  wrists  or  ankles  of  both 
hands  or  both  feet,  or  of  one  hand  and  one  foot,  or  the  irrevocable 
loss  of  both  eyes  shall  be  deemed  to  be  equal  to  total  disability;  the 
loss  by  actual  separation  at  or  above  the  wrist  or  ankle  of  one  hand 
or  one  foot  shall  be  equal  to  one-half  of  total  disability;  and  the  loss 
of  one  eye  shall  be  equal  to  one-fifth  of  total  disability.  Total  disa- 
bility shall  be  deemed  to  mean  inability  to  carry  on  any  gainful 
occupation. 

The  contract  or  the  policy  herein  referred  to  may  provide  that  no 
benefits  shall  be  paid  in  case  of  any  injury  which  does  not  incapacitate 
the  employee  for  a  period  of  at  least  one  week  from  earning  full  wages 
at  the  work  at  which  he  was  employed  at  the  time  of  the  accident. 

SEC.  6.  Any  contract,  in  order  to  satisfy  the  requirements  of  this 
act,  shall  provide  that  the  employer  shall  contribute  not  less  than  50 
per  cent,  of  the  insurance  premiums  and  the  employees  shall  con- 
tribute the  remainder  of  the  premiums.  In  case  the  employer  pro- 
vides any  insurance  fund  out  of  contributions  made  by  himself  and 
his  own  employees,  as  above  provided,  such  employer  shall  pay  the 
whole  of  the  expenses  of  the  management  of  such  fund  and  all  con- 
tributions shall  be  paid  into  such  fund  without  any  deduction  by 
reason  of  such  expense. 

SEC.  7.  The  contract  may  provide  that  upon  penalty  of  forfeiture 
of  the  benefits  of  the  insurance  the  employee  shall  give  reasonable  and 
timely  notice  to  his  employer,  to  be  fixed  by  the  terms  of  the  contract, 
of  any  accident  which  may  entitle  him  to  the  benefits  of  such  insurance, 
and  that  he  shall  submit  himself  to  medical  examination  as  required 
by  the  employer  at  the  employer's  expense. 

SEC.  8.  The  contract  may  provide  that  the  premium  payable  by  the 


APPENDICES  337 

employees  shall  be  deducted  from  their  wages.  An  employer  who 
shall  willfully  and  feloniously  appropriate  the  amounts  so  deducted 
from  the  wages  to  any  use  other  than  the  payment  of  insurance 
premiums  as  stipulated  in  the  contract  shall  be  guilty  of  embezzle- 
ment, and  shall  be  punished  accordingly. 

SEC.  9.  The  contract  between  the  employer  and  employee  may  pro- 
vide that  the  insurance  premiums  shall  be  paid  into  the  hands  of  a 
treasurer  to  be  elected  or  appointed  by  the  employees  or  by  the 
employer  and  the  employees  in  such  manner  and  under  such  voting 
arrangements  as  the  contract  may  specify.  The  payment  of  the 
premiums  to  the  treasurer  shall  relieve  the  employer,  and  the  penalty 
above  prescribed  for  misappropriation  of  the  funds  required  to  be 
applied  to  insurance  shall  apply  to  such  treasurer. 

SEC.  10.  In  case  of  non-payment  of  the  premiums  within  one 
month  after  the  same  are  payable,  the  insurance  company  shall  within 
two  months  after  the  expiration  of  such  month  send  notice  of  such 
default  by  mail  to  the  insured  and  to  the  insurance  superintendent 
of  the  state.  The  insurance  policy  or  the  contract  between  the 
employer  or  employee  may  specify  a  shorter  period  than  the  one 
herein  provided  for.  Until  the  required  notice  shall  have  been  sent, 
the  policy  shall  not  be  forfeited  for  non-payment  of  the  premium. 

SEC.  n.  The  employer  may  also  advance  the  premiums  of  insur- 
ance for  such  number  of  employees  and  at  such  rates  as  may  be 
agreed  upon  between  him  and  the  insurance  company,  and  may  there- 
upon be  supplied  by  the  insurance  company  with  blank  policies  to  be 
filled  in  by  him  with  the  name  of  any  beneficiary  under  the  provisions 
of  this  act  and  to  be  executed  by  him  as  agent  of  such  company;  and 
he  may  thereupon  reimburse  himself  for  the  amounts  payable  by  the 
employee  by  deducting  the  same  from  the  wages  of  such  employee. 

SEC.  12.  Such  contract  may  provide  that  upon  termination  of  his 
employment,  from  any  cause  whatever,  the  employee  and  his  depen- 
dents shall  cease  to  be  entitled  to  the  benefits  of  such  insurance  except 
as  regards  accidents  occurring  before  the  termination  of  his  employ- 
ment. 

SEC.  13.  Such  contract  may  provide  that  any  controversy  regard- 
ing the  extent  of  disability  or  the  extent  of  dependency,  or  any  con- 
troversy between  dependents  as  to  the  amounts  payable  to  them 
respectively,  shall  be  settled  by  arbitration,  the  arbitrators  to  be 
named  by  the  mutual  consent  of  the  parties,  and  should  the  parties 
fail  to  agree  upon  an  arbitrator,  then  the  arbitrator  to  be  named  by  a 


338  INDUSTRIAL  INSURANCE 

judge  of  the  circuit  court  of  the  county  in  which  the  accident  hap- 
pened, and  the  reward  of  such  arbitrator  shall  be  binding  upon  both 
the  employer  and  the  employee,  or  his  dependents,  as  the  case  may  be. 

SEC.  14.  Any  insurance  paid  in  accordance  with  the  provisions  of 
this  act  shall  not  be  liable  to  attachment  by  trustee,  garnishee,  or 
other  process,  and  shall  not  be  seized,  taken,  appropriated,  or  applied 
by  any  legal  or  equitable  process,  or  by  operation  of  law,  to  pay  any 
debt  or  liability  of  the  insured  or  any  beneficiary,  nor  shall  any  claim 
to  insurance  money  be  assignable  by  the  payee  before  the  same  is  paid. 

SEC.  15.  A  contract  for  insurance  in  pursuance  of  the  terms  of  this 
Act  shall  not  relieve  the  employer  from  liability  for  any  accident  due 
to  his  failure  to  comply  with  the  lawful  directions  of  any  competent 
administrative  authority  given  in  the  interest  of  the  safety  of  employees, 
unless  it  shall  have  been  impossible  to  carry  out  such  directions  by  the 
time  that  the  accident  happened,  or  unless  the  enforcement  of  such 
directions  has  been  suspended  by  the  order  of  a  court  of  competent 
jurisdiction. 

SEC.  16.  Every  employer  shall  file  with  the  insurance  superintendent 
a  copy  of  the  form  of  contract  and  policy  which  he  shall  use  under 
the  provisions  of  this  act,  and  in  the  event  of  such  form  being  departed 
from  in  any  particular  case,  shall  also  file  a  copy  of  such  particular 
contract.  If  he  shall  fail  to  do  so  he  shall  be  liable  to  a  penalty  of 
$50.00,  in  each  case  to  be  recovered  in  an  action  of  debt  in  the  name 
of  the  people  of  the  state. 

SEC.  17.  A  quarterly  report  of  all  settlements  and  payments  of 
insurance  benefits  shall  be  filed  by  the  employer  with  the  insurance 
superintendent.  If  such  employer  shall  fail  to  make  such  report  in 
thirty  days  after  demand  by  the  insurance  superintendent,  he  shall  be 
liable  to  a  penalty  of  $50.00,  to  be  recovered  in  an  action  of  debt  in 
the  name  of  the  people  of  the  state. 

SEC.  18.  The  insurance  superintendent  shall  prepare  blanks  of 
contract  and  policies  complying  with  the  provisions  of  this  act  and 
shall  distribute  the  same  upon  application  free  of  charge. 

SEC.  19.  Nothing  in  this  act  contained  shall  be  construed  as  author- 
izing any  employer  and  any  officer  or  agent  of  such  employer  to 
require  any  employee  or  any  person  seeking  employment  as  a  condition 
of  such  employment,  or  of  the  continuance  of  such  employment,  to 
enter  into  a  contract,  or  to  continue  in  such  contract,  such  as  is 
authorized  to  be  made  by  sec.  I  of  this  act 


APPENDIX  E 
CASUALTY  INSURANCE  COMPANY  CONTRACTS1 

The  following  are  the  forms  of  policies  and  applications  as 
adopted  by  the  Liability  Conference,  June,  1904,  and  now  in  use  by 
the  companies  forming  the  conference.  Thirteen  liability  companies 
are  members  of  the  conference,  but  the  policies  issued  by  them  follow 
the  same  general  lines.  The  character  of  the  liability  insurance  con- 
tract, the  extent  of  liability  of  the  insuring  company,  and  the  duties  of 
the  insured  in  respect  to  such  contracts  are  clearly  set  forth  in  these 
documents. 

FORM  OF  LIABILITY  POLICY  AND  GENERAL  AGREEMENTS 

The  following  skeleton,  or  general  form  of  liability,  and  the  con- 
ditions appended,  are  the  same  in  all  liability  contracts  approved  by 
the  Conference.  Special  agreements,  or  conditions,  as  given  herewith, 
adapt  this  form  to  each  class  of  the  liability  contract : 

In  consideration  of  the  application  for  this  policy,  a  copy  of  which 
is  hereto  attached  and  which  is  made  part  of  this  contract,  and  of  .... 
dollars  ($..)  premium,  ....  hereinafter  called  "the  company,"  does 

hereby  agree  to  indemnify  .  .  .  .  ,  of  .  .  .  .  ,  County  of State  of 

.  .  .  .  ,  hereinafter  called  "the  assured,"  for  the  term  of  .  .  .  .  ,  beginning 
on  the  ....  day  of  .  .  .  .  ,  at  noon,  and  ending  on  the  .  .  .  .  ,  day  of 
.  .  .  .  ,  190..,  at  noon,  standard  time,  at  the  place  where  this  policy  has 
been  countersigned. 

GENERAL   AGREEMENTS 

This  insurance  is  subject  to  the  following  conditions,  which  are  to  be 
construed  as  conditions  precedent  of  this  contract : 

1.  The  assured,  upon  the  occurrence  of  an  accident,  shall  give  im- 
mediate notice  thereof  in  writing,  with  full  particulars,  to  the  home  office 
of   the    company,    or   to    its   duly    authorized    agent.      He   shall   give    like 
notices,  with  full  particulars,  of  any  claim  which  may  be  made  on  account 
of  such  accident. 

2.  If  thereafter  any  suit  is  brought  against  the  assured  to  enforce  a 
claim  for  damages  on  account  of  an  accident  covered  by  this  policy,  im- 
mediate notice  thereof  shall  be  given  to  the  company,  and  the  company 

1  Manual  of  Liability  Insurance  (March,  1905),  pp.  39  ff . ;  New  York, 
The  Spectator  Co. 

339 


340  INDUSTRIAL  INSURANCE 

will  defend  against  such  proceedings,  in  the  name  and  on  behalf 
of  the  assured,  or  settle  the  same  at  its  own  cost,  unless  it  shall  elect  to 
pay  to  the  assured  the  indemnity  provided  for  in  clause  "A"  of  special 
agreements  as  limited  therein. 

3.  The  assured  shall  not  settle  any  claim,  except  at  his  own  cost,  nor 
incur  any  expense,  nor  interfere  in  any  negotiation  for  settlement  or  in 
any  legal  proceeding  without  the  consent  of  the  company  previously  given 
in  writing,  but  he  may  provide  at  the  time  of  the  accident  such  immediate 
surgical  relief  as  is  imperative.     The  assured,  when  requested  by  the  com- 
pany,   shall    aid   in   securing   information   and    evidence    and    in    effecting 
settlements,    and   in    case   the   company   calls    for  the   attendance   of    any 
employee  or  employees  as  witnesses  at  inquests  and  in  suits,  the  assured 
will  secure  his   or  their  attendance,   making  no  charge   for  his   or  their 
loss   of   time. 

4.  This  policy  does  not  cover  loss  from   liability   for  injuries  when 
the  assured  has  failed  to  observe  any  statute  affecting  the  safety  of  per- 
sons  or  has  with   knowledge  violated   any   local   ordinance   made   in   the 
same  behalf. 

5.  This  policy  does  not  cover  loss  for  liability   for  injuries  to   any 
child    employed    contrary   to    law,    nor   to    any   child    so    employed   under 
fourteen  years  of  age,  where  no  statute  restricts  the  age  of  employment, 
nor  does  this  policy  cover  any  injury  due  wholly  or  in  part  to  the  employ- 
ment   of    any    such    child. 

6.  If  the  assured  carry  a  policy  of  another  insurer,  whether  valid  or 
not,  against  a  claim  arising  under  this  policy,  he  shall  not  be  entitled  to 
recover  from  the  company  a  larger  proportion  of  the  loss  than  the  sum 
hereby  insured  bears  to  the  whole  amount  of  insurance.     If  the  assured 
has  any  other  policy  in  this   company,   in   respect   of  any  injury   covered 
hereby,  the  assured  shall  elect  the  policy  under  which  the  accident  shall 
be  treated,  but  the  company  shall  not  be  held  responsible  for  a  liability 
under  more  than  one  policy. 

7.  Any  assignment  of  interest  under  this  policy  shall  be  void  unless 
the  written  consent  of  the  company  is  indorsed  hereon  by  one  of  its  officers. 

8.  No  action  shall  lie  against  the  company  as  respects  any  loss  under 
this  policy  unless  it  shall  be  brought  by  the  assured  himself  to  reimburse 
him  for  loss  actually  sustained  and  paid  by  him  in  satisfaction  of  a  judg- 
ment after  trial  of  the  issue.     No  such  action  shall  lie  unless  brought  within 
the  period  within  which   a   claimant  might   sue  the   assured    for  damages 
unless    at    the    expiry    of    such    period    there    is    such    an    action    pending 
against  the  assured,  in  which  case  an  action  may  be  brought  against  the 
company  by  the  assured  within  thirty  days  after  final  judgment  has  been 
rendered  and  satisfied  as  above.     In  no  case,  except  that  of  minors,  shall 
any  action  lie  against  the  company  after  the  expiration  of  six  years  from 
the  date  of  the  given  injuries  or  death.     The  company  does  not  prejudice 


APPENDICES  341 

by  this  clause  any  defenses  to  such  action  which  it  may  be  entitled  to  make 
under  this  policy. 

9.  In  case  of  payment  of  loss  under  this  policy,  the  company  shall 
be  subrogated  to  all  claims  or  rights  of  the  assured  in  respect  to  such  loss 
against  any  person  or  persons,  and  the  assured  shall  execute  any  and  all 
papers  required  to  secure  to  the  company  said  rights. 

10.  An  agent  has  no  authority  to  change  this  policy  or  to  waive  any 
of  its  provisions,  nor  shall  notice  to  any  agent  or  knowledge  of  his  or  of 
any  other  person  be  held  to  effect  a  waiver  or  change  in  this  contract,  or  in 
any  part  of  it.     No  change  whatever  in  this  policy  nor  waiver  of  any  of 
its  provisions  shall  be  valid  unless  an  indorsement  is  added  hereto,  signed 
by  the  president  or  secretary  of  the  company,  at  its  home  office,  express- 
ing such  waiver  or  change. 

This  policy  shall  cover  losses  sustained  by  and  liability  for  any  claims 
against  the  assured  as  a  result  of  the  risk  specified  in  the  contract  or  con- 
tracts hereto  attached,  and  is  issued  and  accepted  upon  the  condition  that 
all  the  provisions  printed  on  the  slip  or  slips  attached  to  this  policy  are 
accepted  and  shall  be  fulfilled  by  the  assured  as  part  of  this  contract  as 
fully  as  if  they  were  recited  at  length  over  the  signatures  hereto  affixed. 

In  witness  whereof,  the  ....  company  has  caused  this  policy  to  be 
signed  by  its  president  and  secretary,  at  .  .  .  .  ,  but  the  same  shall  not 
be  binding  upon  the  company  unless  countersigned  by  a  duly  authorized 
representative  of  the  company. 

President Secretary. 

Countersigned  at  ....  this  day  of  .  .  .  .  ,  190 

General  Agent. 


WORKMEN'S   COLLECTIVE  INSURANCE  2 

Against  bodily  injuries  sustained  by  any  employee  or  employees  of  the 
assured  through  external,  violent  and  accidental  means,  while  actually 
engaged  in  the  occupation  and  at  the  places  mentioned  in  the  schedule 
indorsed  hereon,  and  resulting  from  the  operation  of  the  trade  or  business 
described  in  said  schedule. 

SPECIAL    AGREEMENTS 

Clause  A.  If  the  death  of  any  employee  shall  result  within  ninety 
days  from  such  injuries,  independent  of  all  other  causes,  the  company  will 
pay  to  the  assured  a  sum  equal  to  ....  week's  wages,  computed  at  the 
rate  per  week  received  by  such  injured  employee  at  date  of  accident,  but 
such  sum  shall  not  exceed  one  thousand  five  hundred  dollars. 

Clause  B.     If  any  employee  shall,  within  ninety  days,  as  the  result  of 
such  injuries,   independent  of  all   other  causes,   lose  by  actual   separation, 
at  or  above  the  wrists  or  ankles,  both  hands  or  both  feet,  one  hand  and  one 
*  Manual  of  Liability  Insurance,  as  cited,  p.  61. 


342  INDUSTRIAL  INSURANCE 

foot,  or  shall  irrecoverably  lose  the  sight  of  both  eyes,  the  company  will 
pay  to  the  assured  the  amount  specified  in  Clause  A. 

Clause  C.  If  any  employee  shall,  within  ninety  days,  as  the  result  of 
such  injuries,  independent  of  all  other  causes,  lose  by  actual  separation,  at 
or  above  the  wrist  or  ankle,  one  hand  or  one  foot,  the  company  will  pay 
to  the  assured  one-third  the  amount  specified  in  Clause  A. 

Clause  D.  If  any  employee  shall,  within  ninety  days,  as  the  result  of 
such  injuries,  independent  of  all  other  causes,  irrevocably  lose  the  sight 
of  one  eye,  the  company  will  pay  to  the  assured,  in  satisfaction  of  all 
claims  for  such  injury,  a  sum  equal  to  one-eighth  the  amount  specified 
in  Clause  A,  but  not  exceeding  two  hundred  dollars. 

'Clause  E.  If  such  injuries,  independent  of  all  other  causes,  shall 
immediately,  continuously  and  wholly  disable  and  prevent  such  employee 
from  engaging  in  any  work  or  occupation  for  wages,  the  company  will 
pay  to  the  assured  an  amount  equal  to  one-half  the  usual  weekly  wages  of 
the  injured  employee  for  the  period  of  such  disability,  not  exceeding 
twenty-six  weeks  in  respect  of  any  one  accident,  but  such  sum  shall  not 
exceed  five  hundred  dollars  in  respect  of  any  one  injured  person  during 
the  policy  year. 

1.  Recovery  may  be  had  for  the  benefit  of  the  same  employee  under 
one    of   the    foregoing    clauses    only    as    respects    the    results    of    injuries 
caused  by  any  accident,  and  in  no  event  shall  the  company's  liability  for 
a  casualty,  resulting  in  injuries  to,  or  the  death  of  several  persons,  exceed 
ten  thousand  dollars. 

2.  The  premium  is  based  on  the  wages  to  be  expended  by  the  assured 
during  the  period  of  this  policy.     If  the  wages  actually  paid  exceed  the 
sum  stated  in  said  schedule,  the  assured  shall  pay  the  additional  premium 
earned ;  if  less  than  the  sum  stated,  the  company  will  return  to  the  assured 
the  unearned  premium,  pro  rata,  but  the  company  shall  first  retain  not  less 
than  .  .  .  dollars    ($...),   it  being  understood   and   agreed  that  this  sum 
shall  be  the  minimum  earned  premium  under  this  policy. 

Issued  by  the  ....  company  to  .... 

Countersigned    President Secretary. 

SCHEDULE 

i.     Name  of  assured  ....  2.    Address  of  assured  (name  street,  town, 

county,  and  state  where  office  is  located) 3.     The  locations  of 

all  factories,  shops,  or  yards  are  given  below  ....  4.  Trade  or  business 
is  ....  (state  what  the  business  is,  giving  the  ratebook  classification, 
specifically  including  character  of  work,  etc.).  5.  The  application  of 
employees  are  those  usual  and  necessary  to  the  trade  or  kind  of  business 
described  above.  6.  No  power  is  used  except  as  follows :  ....  7.  There 
are  ...  boilers.  Their  type  is  ...  Their  age  is  ...  8.  There  are 
.  .  .  elevators.  Their  type  is  ...  The  maker's  name  is  ...  9.  No 


APPENDICES 


343 


chemicals  are  used,  except  as  follows:  ...  10.  No  explosives  are  used, 
except  as  follows:  ...  u.  No  stamping  of  sheet  or  other  metal  is  done 
by  power  presses,  except  as  follows :  .  .  .  (state  number  of  power  presses, 
if  any)  ...  12.  The  estimated  pay-roll  includes  the  wages  of  all  executive 
officers,  office  men,  piece-workers  employed  in  the  factories  or  shops,  and 
all  other  employees,  except  as  follows:  ...  13.  The  employees  whose 
wages  are  included  in  the  following  list  do  not  make  alterations  or  addi- 
tions to  buildings  or  plant.  They  make  no  repairs,  except  as  follows :  .  .  . 
14.  The  following  similar  insurance  is  carried :  Boiler,  $  ....  Name  of 
company  ....  Employer's  liability  $  ....  Name  of  company  ....  Ele- 
vator, $  ....  Name  of  company  ....  15.  The  insurances  described 
in  paragraph  14  cover  the  period  for  which  this  policy  is  written  except 
as  follows :  .  .  .  . 

1 6.  The  estimated  average  number  of  employees  in  each  class  or 
occupation  and  the  estimated  average  annual  wages  in  each  description  or 
class  are  given  in  the  following  list : 


Description  of  Occupation. 
(Only  those  usual  and 
necessary  to  the  business 
are  covered  by  this 
policy.) 

Esti- 
mated 
Average 
Number 

Esti- 
mated 
Total 
Annual 
Wages 

Places  Where  Shops, 
Factories,  or  Yards  Are 
Located 

Remarks 

17.  The  total  expenditure  for  wages  for  the  last  calendar  year,  ended 
December  31,  190...,  was  $...  18.  The  estimated  expenditure  for  wages 
for  the  term  of  this  policy  is  $. . .  The  premium  rate  is. . .  cents  for  each 
$100  of  wages.  The  minimum  premium  is  $... 

SURGEON'S  CLAUSE 

In  consideration  of  an  additional  premium  of  $...,  being  at  the  rate 
of  $...,  for  every  one  hundred  dollars  ($100)  of  wages  paid  to  the  em- 
ployees, this  policy,  subject  to  all  its  agreements  and  conditions,  is  hereby 
extended  so  that  the  company  will,  at  its  own  cost  and  expense,  furnish  to 
the  injured  employee,  through  its  own  surgeon,  such  medical  attendance 
as  may  be  considered  by  such  surgeon  necessary  to  the  treatment  of  any 
injuries  covered  hereby. 

Dated  .  .  .  .  ,     190  ...     Countersigned  .... 


344  INDUSTRIAL  INSURANCE 

GENERAL  EXPOSURE  CLAUSE 

In  consideration  of  an  additional  premium  of  $...,  being  at  the  rate 
of  $...  for  every  one  hundred  dollars  ($100)  of  wages  paid  to  employees, 
this  policy,  subject  to  all  its  benefits,  agreements,  and  conditions,  is  hereby 
extended  to  cover  accidents  to  the  employees  of  the  assured  insured  here- 
under,  occurring  at  any  time  or  place  during  the  continuance  of  this  policy. 
Dated  .  .  .  .  ,  190  ...  Countersigned  .... 


APPENDIX  F 

FORM  OF  AGREEMENT  FOR  LARGE  FIRMS1 

ARTICLES  OF  ASSOCIATION 

ARTICLE  I 

NAME 

The  undersigned,  employees  of  the  United  Traction  and  Electric 
Company,  or  of  companies  owned,  operated,  or  controlled  by  it, 
hereby  form  an  association  under  the  name  of  the  United  Traction 
Employees  Mutual  Aid  Association. 

ARTICLE  II 

OBJECT 

The  object  of  this  Association  is  to  afford  aid  and  relief  to  sick 
and  disabled  members  and  to  the  widows  and  children  of  deceased 
members. 

ARTICLE  III 

%  MEMBERS 

Membership  in  this  Association  shall  be  limited  to  employees  of 
the  following  companies,  namely:  The  United  Traction  and  Electric 
Company,  The.  Rhode  Island  Company  and  companies  owned,  oper- 
ated, or  controlled  by  them,  or  either  of  them. 

BY-LAWS 
ARTICLE  I 

MEMBERSHIP 

SECTION  i.  Every  employee  of  the  United  Traction  and  Electric 
Company,  or  of  any  company  owned,  operated  or  controlled  by  it,  and 
every  employee  of  the  Rhode  Island  Company  who  is  engaged  in  its 
street  railway  business  wha  shall  make  the  weekly  contributions  here- 
inafter required,  shall  be  a  member  of  this  Association  so  long  as  he 
remains  such  employee,  or  is  in  receipt  of  a  pension  from  any  of  said 
companies,  or  of  benefits  from  this  Association.  Provided,  however, 
that  neither  elective  officers  of  said  companies  nor  temporary  laborers 
on  construction  work  shall  be  members. 

1  This  form  was  drawn  up  under  the  direction  of  the  actuary,  Mr. 
M.  M.  Dawson.  It  is  not  recommended  for  employers  of  a  small  force 
of  wage  earners. 

345 


346  INDUSTRIAL  INSURANCE 

SEC.  2.  No  certificate  of  membership  shall  be  required,  but  proof 
of  the  fact  that  any  person  was,  at  a  given  date,  eligible  to  member- 
ship, as  provided  in  sec.  I,  and  had  duly  made  all  the  contributions 
required  by  these  By-Laws,  shall  be  evidence  that  such  person  was, 
on  that  date,  a  member  of  this  Association  and  entitled  to  benefits  as 
hereinafter  provided. 

ARTICLE  II 

BOARD  OF  TRUSTEES 

SECTION  i.  The  management  of  this  Association  shall  be  vested 
in  a  Board  of  Trustees,  which  shall  consist  of  seven  persons.  Until 
the  first  day  of  January,  A.  D.  1903,  this  board  shall  be  composed  of 
four  persons  to  be  elected  by  the  directors  of  the  United  Traction 
and  Electric  Company  and  of  the  following  members  of  this  Associa- 
tion, viz. :  George  S.  Apley,  Frederick  T.  Nicholas,  and  Charles  Young. 
From  and  after  the  first  day  of  January,  A.  D.  1903,  said  board  shall 
consist  of  four  persons  to  be  elected  by  the  Directors  of  the  United 
Traction  and  Electric  Company  before  the  first  day  of  January  of 
each  year,  and  three  persons  to  be  chosen  from  their  own  number  by 
the  members  of  the  Association  in  the  following  manner,  viz. :  Each 
member  whose  name  is  on  a  pay-roll  shall  give  in  his  ballot  to  the 
paymaster  at  the  time  of  payment  of  his  wages  next  before  December 
25  in  each  yean  Members  whose  names  are  not  on  a  pay-roll  shall 
send  in  their  ballots,  with  their  names  indorsed  thereon,  to  the  chair- 
man of  the  Board  of  Trustees.  The  paymaster  shall  also  turn  in  all 
ballots  received  by  him  to  the  chairman  of  the  board.  The  votes  shall 
be  counted  by  the  board  or  under  its  supervision,  at  a  meeting  to  be 
held  for  the  purpose  not  later  than  December  30th;  and  the  three 
members  having  the  largest  number  of  votes  shall  be  declared  elected. 

SEC.  2.  From  and  after  the  first  day  of  January,  (A.  D.  1903,  the 
Board  of  Trustees  shall  hold  their  offices  for  the  period  of  one  year, 
beginning  on  the  first  day  of  January  next  succeeding  the  date  on 
which  they  were  chosen.  Any  vacancies  in  the  number  of  the  trustees 
chosen  by  the  Directors  of  the  United  Traction  and  Electric  Company 
may  be  filled  by  the  remaining  trustees  chosen  by  said  directors.  And 
any  vacancies  in  the  number  of  the  trustees  chosen  by  the  members 
of  the  Association  may  be  filled  by  the  remaining  trustees  chosen  by 
said  members. 

SEC.  3.  The  Board  of  Trustees  shall  meet  at  two  o'clock  P.  M.  on 
the  first  Thursday  of  each  month  at  the  office  of  the  Union  Railroad 
Company  in  the  City  of  Providence;  provided,  that  the  board  may 


APPENDICES  347 

change  the  time  and  place  of  such  meeting,  giving  at  least  three  days' 
notice  of  such  change  to  each  trustee.  Special  meetings  may  be  called 
by  the  chairman  and  shall  be  called  by  the  secretary  upon  request  in 
writing  of  a  majority  of  the  board.  At  least  three  days'  notice  of 
such  special  meeting  shall  be  given  to  each  trustee.  All  notices  shall 
be  signed  by  the  secretary,  and  shall  be  mailed,  postpaid,  to  the  several 
trustees  at  their  addresses  as  last  given  to  the  secretary. 

SEC.  4.  Four  trustees  shall  constitute  a  quorum  for  the  transaction 
of  business.  When  at  any  meeting  a  less  number  than  a  quorum  is 
present,  they  may  adjourn  the  meeting,  giving  at  least  three  days' 
notice  of  the  time  and  place  of  such  adjourned  meeting  to  the  absent 
trustees. 

SEC.  5.  The  Board  of  Trustees  shall  in  the  month  of  January  in 
every  year  cause  an  audit  and  examination  of  the  Association's  accounts 
and  condition  to  be  made  by  a  competent  actuary  who  shall  not  be  a 
member  of  said  board,  and  shall  issue  a  printed  report  for  circulation 
among  the  members  setting  forth  the  receipts  and  disbursements  for 
the  previous  year  and  the  assets  and  liabilities  on  December  315!-  thereof, 
and  such  other  facts  as  they  may  deem  advisable  concerning  the 
transactions  and  condition  of  the  Association. 

ARTICLE  III 

OFFICERS    AND    THEIR    DUTIES 

SECTION  i.  The  Board  of  Trustees  shall,  at  their  first  regular  meet- 
ing after  their  election,  proceed  to  organize  by  the  election  of  a  chair- 
man, a  treasurer,  a  secretary,  and  such  other  officers  as  they  may 
deem  necessary.  All  officers  shall  hold  their  offices  during  the  pleasure 
of  the  board. 

SEC.  2.  It  shall  be  the  duty  of  the  chairman  to  preside  at  all 
meetings. 

SEC.  3.  It  shall  be  the  duty  of  the  secretary  to  keep  a  correct 
record  of  the  proceedings  of  all  meetings;  to  keep  a  correct  account 
of  the  receipts  and  disbursements  of  the  Association  and  to  report  the 
same  to  the  Board  of  Trustees  when  required;  and  to  give  all  notices 
required  by  the  By-Laws. 

SEC.  4.  It  shall  be  the  duty  of  the  treasurer  to  receive  and  hold  the 
funds  of  the  Association,  depositing  the  same  in  a  bank  or  banks 
approved  by  the  Board  of  Trustees,  and  disbursing  moneys  only  upon 
the  joint  order  of  the  chairman  and  secretary.  It  shall  be  required  to 
give  bond,  approved  by  the  board,  in  the  sum  of  five  thousand  dollars 
for  the  faithful  performance  of  his  duties. 


348      -  INDUSTRIAL  INSURANCE 

ARTICLE  IV 

CONTRIBUTIONS 

SECTION  I.  For  the  purpose  of  determining  benefits  and  contribu- 
tions, the  members  of  this  Association  shall  be  divided  into  three 
classes,  as  follows : 

Class  First — All  members  whose  weekly  earnings  are  less  than 
nine  (9)  dollars. 

Class  Second — All  members  whose  weekly  earnings  are  nine  (9) 
dollars  or  more  but  not  so  much  as  twelve  (12)  dollars. 

Class  Third — All  members  whose  weekly  earnings  are  twelve  (12) 
dollars  or  more. 

The  amount  of  wages  paid  the  member  for  the  week  of  his 
employment  last  previous  to  claim  being  made  for  death  or  disability 
benefit  shall  determine  the  class  of  the  member;  provided  that  in  cases 
where,  by  reason  of  absence  for  part  of  the  week,  the  wages  fall 
below  the  usual  figure,  no  change  of  class  shall  take  place  if  the 
member  make  the  contribution  required  in  his  proper  class. 

SEC.  2.  The  contributions  of  members  to  the  funds  of  the  Asso- 
ciation shall  be  as  follows : 

Class  First — Ten  cents  each  week. 

Class  Second — Fifteen  cents  each  week. 

Class  Third — Twenty  cents  each  week. 

Such  contributions  shall  be  made  each  week  during  the  receipt  of 
benefits  from  the  Association  for  sickness  or  accident  as  well  as  each 
week  when  the  member  is  engaged  in  his  employment;  and  also  each 
week  when  the  member  is  in  receipt  of  a  pension  from  either  of  the 
companies  mentioned  in  Art.  I,  sec.  i. 

ARTICLE  V 

BENEFITS    AT    DEATH 

SECTION  i.  Upon  proof  of  the  death  of  a  member  from  any  cause 
except  those  mentioned  in  sec.  3  of  this  article,  there  shall  be  paid  to 
his  beneficiary  or  beneficiaries,  as  hereinafter  provided,  the  following 
sum,  according  to  the  class  of  membership,  viz., 

Member  of  the  first  class,  five  hundred  (500)  dollars. 

Member  of  the  second  class,  seven  hundred  and  fifty  (75°)  dollars. 

Member  of  the  third  class,  one  thousand   (1,000)   dollars. 

SEC.  2.  Said  sums  shall  be  paid,  one-half  to  the  widow  or  husband, 
and  one-half  to  the  children  of  the  deceased;  and  if  there  be  no  children, 
the  whole  shall  go  to  the'widow  or  husband,  and  if  there  be  no  widow 
or  husband,  to  the  next  of  kin,  in  the  proportion  provided  by  law  in 


APPENDICES  349 

relation  to  the  distribution  of  personal  property  left  by  persons  dying 
intestate. 

Provided,  however,  that  no  person  shall  be  entitled  to  receive  any 
benefit  upon  the  death  of  any  member  of  this  Association  who  was, 
at  the  time  of  his  decease,  in  receipt  of  a  pension  from  either  of  the 
companies  mentioned  in  Art.  I,  sec.  i ;  except  the  widow  or  husband 
of  such  member. 

SEC.  3.  No  right  to  benefits  shall  accrue  to  any  person  upon  the 
death  of  a  member  if  such  death  is  due  wholly  or  in  part,  directly  or 
indirectly,  to  intoxication  or  to  the  use  of  alcoholic  liquors,  as  a 
beverage,  or  to  the  immoderate  use  of  stimulants  or  narcotics;  or  to 
unlawful  acts  of  immorality;  or  to  venereal  disease,  however  con- 
tracted; or  to  fighting,  except  in  self-defense  against  unprovoked 
assault;  or  to  any  injury  received  in  a  liquor  saloon,  gambling-house, 
or  other  disreputable  resort,  or  resulting  from  voluntary  and  unneces- 
sary exposure  to  danger  of  injury,  contagion  or  infection,  unless  in 
pursuance  of  duty  as  an  employee  of  some  of  the  companies  men- 
tioned in  Art.  I,  sec.  i. 

ARTICLE  VI 

BENEFITS    IN    CASE  OF   DISABILITY 

SECTION  i.  Upon  proof  of  the  disability,  as  hereinafter  defined,  of 
a  member  from  any  cause  which  is  not  hereinafter  declared  to  dis- 
qualify him  from  receiving  benefits,  there  shall  be  paid  to  such  mem- 
ber the  following  sum,  according  to  the  class  of  membership,  viz., 

Member  of  the  first  class,  four  (4)  dollars  per  week. 

Member  of  the  second  class,  six  (6)  dollars  per  week. 

Member  of  the  third  class,  eight  (8)  dollars  per  week. 

Provided,  that  if  the  total  benefit  insurance  of  any  member,  includ- 
ing that  herein  provided,  exceeds  his  average  weekly  wages,  the  benefit 
to  be  received  by  such  member  from  this  Association  shall  be  such 
proportion  of  the  benefit  hereinbefore  specified  as  his  average  weekly 
wages  bears  to  his  total  benefit  insurance. 

SEC.  2.  Disability  is  hereby  defined  as  total  incapacity  to  carry  on 
any  gainful  occupation.  But  no  benefits  shall  be  paid  for  disability 
arising  from  any  of  the  causes  mentioned  in  sec.  3  of  Art.  V.  of 
these  By-Laws. 

SEC.  3.  Benefits  for  disability  shall  be  payable  to  the  member  so 
long  as  the  disability  continues ;  provided,  that  no  benefit  for  dis- 
ability shall  continue  to  be  paid  after  the  person  entitled  to  such 
benefit  becomes  entitled  to  a  pension  from  any  of  the  companies  men- 
tioned in  Art.  I,  sec.  i. 


350  INDUSTRIAL  INSURANCE 

SEC.  4.  Members  shall  have  no  property  in  the  several  instalments 
of  disability  benefits  until  the  same  shall  become  payable,  which  shall 
be  at  twelve  o'clock  noon  on  each  Thursday  during  the  period  of  the 
member's  disability.  No  assignment  of  such  benefits  shall  be  recog- 
nized by  the  Association.  And  if  the  right  of  the  beneficiaries  named 
in  these  by-laws  to  such  benefits  shall  in  any  manner  become  alienated 
so  that  such  beneficiaries  cannot  themselves  receive  the  same,  the 
obligation  of  the  Association  to  pay  such  benefits  shall  thereupon 
cease. 

ARTICLE  VII 

RELEASES 

SECTION  I.  In  consideration  of  the  agreement  between  the  United 
Traction  and  Electric  Company  and  this  Association,  and  of  the  con- 
tributions to  be  made  to  the  funds  of  this  Association  as  provided  by 
said  agreement,  and  of  the  assumption  by  the  Rhode  Island  Company 
of  the  obligations  of  the  United  Traction  and  Electric  Company  under 
said  agreement,  no  benefit  either  for  death  or  disability  shall  be  pay- 
able except  upon  a  receipt  which  shall  contain  a  release  in  proper  form 
to  said  United  Traction  and  Electric  Company  and  the  several  com- 
panies owned,  operated  or  controlled  by  it,  and  to  the  Rhode  Island 
Company  from  all  liability  to  the  beneficiaries  on  account  of  such 
death  or  disability,  and  of  any  injury,  act,  neglect,  or  omission  by 
which  such  death  or  disability  was  caused.  - 

SEC.  2.  Should  any  member  or  any  beneficiary  of  a  member  make 
any  claim  or  bring  any  suit  against  said  United  Traction  and  Electric 
Company,  The  Rhode  Island  Company,  or  any  company  owned,  oper- 
ated or  controlled  by  them,  or  either  of  them,  for  damages  because  of 
any  such  death,  disability,  injury,  act,  neglect,  or  omission,  or  cause 
such  claim  to  be  made  or  suit  to  be  brought,  such  member  or  bene- 
ficiary shall  not  be  entitled  to  receive  any  benefits  from  this  Associa- 
tion, unless  such  claim  is  abandoned  or  withdrawn  or  such  suit  dis- 
continued without  trial.  Any  payment,  compromise  or  settlement  of 
such  claim,  or  of  any  judgment  under  such  suit  shall  cancel  and 
nullify  all  the  rights  of  such  member  or  beneficiary  to  any  benefits 
from  this  Association. 

ARTICLE  VIII 

PROOFS   OF   DEATH    AND   DISABILITY 

SECTION  i.  To  entitle  to  benefits  for  death  of  a  member,  proof  of 
the  fact  and  cause  of  death  and  of  the  identity  of  the  deceased  and 
the  relationship  of  the  beneficiary  must  be  furnished  within  thirty  (30) 


APPENDICES  351 

days   after   the   death   of   the   member   upon   blanks    supplied   by   the 
Association. 

SEC.  2.  To  entitle  to  benefit  for  disability  notice  of  such  disability, 
specifying  the  nature  of  the  same,  must  be  given  to  the  Association 
within  thirty  (30)  days  after  the  commencement  of  such  disability. 
If  such  notice  is  given  within  two  days  after  the  commencement  of 
such  disability,  benefits  will  accrue  from  the  date  of  such  commence- 
ment; otherwise,  from  the  date  of  the  notice  only.  The  disabled 
member  must  at  any  and  all  times  permit  a  physician  or  physicians 
selected  by  the  Association  to  examine  him.  And  a  refusal  at  any 
time  to  permit  such  examination  shall  forfeit  all  right  to  further  bene- 
fits until  such  examination  is  permitted. 

SEC.  3.  The  Board  of  Trustees  shall  determine  the  right  of  any 
member  or  beneficiary  to  benefits  or  may  delegate  this  power  to  any 
person  or  persons  whom  it  may  select.  Any  determination  by  any 
person  or  persons  so  selected,  of  the  right  of  any  member  or  bene- 
ficiary to  a  benefit,  shall  be  reviewed  by  the  board  upon  application  of 
any  member  of  said  board,  or  of  the  member  or  beneficiary  of  the 
Association  who  is  interested  in  such  benefit.  In  all  cases  where  the 
question  of  the  payment  of  a  benefit  is  decided  by  the  board,  whether 
originally  or  on  review,  it  shall  be  necessary,  in  order  that  the  benefit 
shall  be  paid,  that  a  majority  of  all  the  trustees  shall  concur  in  order- 
ing such  payment. 

ARTICLE  IX 

APPLICATION  OF  SURPLUS  FUNDS 

SECTION  I.  The  Board  of  Trustees  may  at  its  discretion  apply  any 
surplus  of  funds  which  the  Association  may  from  time  to  time  be 
found  to  possess,  in  any  one  or  more  of  the  following  ways : 

First,  To  pay  partial  benefits  for  partial  disability. 

Second,  To  increase  the  benefits  for  death  or  disability  or  both. 

Third,  To  diminish  the  contributions  of  the  members,  ratably. 

SEC.  2.  In  event  such  surplus  or  part  thereof  be  applied  to  pay 
partial  benefits  for  partial  disability,  the  Board  of  Trustees  shall  have 
power  to  determine  both  who  are  entitled  thereto  and  the  amount  of 
benefit  which  shall  be  paid  in  each  case. 

ARTICLE  X 

FORFEITURE  OF   MEMBERSHIP  AND  BENEFITS 

SECTION  i.  It  being  the  aim  and  purpose  of  this  Association  to 
provide  benefits  only  for  employees  of  the  Rhode  Island  Company,  the 
United  Traction  and  Electric  Company  and  of  companies  owned,  oper- 


352  INDUSTRIAL  INSURANCE 

ated  and  controlled  by  them  or  either  of  them  and  to  secure  the  benefits 
provided  by  the  foregoing  by-laws  to  such  employees  at  the  current  cost 
of  the  same,  less  the  contributions  to  be  made  as  provided  by  contract 
with  this  Association,  by  said  United  Traction  and  Electric  Company 
and  by  the  Rhode  Island  Company,  by  virtue  of  its  assumption  of  said 
contract,  it  is  hereby  expressly  declared  that  every  member  who  shall 
cease  from  any  cause  to  be  an  employee  of  said  company  or  com- 
panies, or  of  some  of  them,  shall  thereupon  cease  to  be  a  member  of 
this  Association;  and  that  he  and  each  and  every  of  his  beneficiaries 
shall  thereupon  forfeit  all  right,  title  and  interest,  if  any  he  or  they 
had,  in  or  to  funds  held  by  said  Association,  and  all  right  or  claim 
to  receive  any  benefits  from  said  Association;  provided,  however,  that 
nothing  in  this  article  contained  shall  affect  the  provisions  heretofore 
made  by  these  By-laws  for  members  and  the  beneficiaries  of  members, 
who,  while  not  actually  in  the  employ  of  any  of  the  companies  men- 
tined  in  Art.  I,  sec.  I,  are  in  receipt  of  benefits  from  this  Association 
for  total  disability,  or  of  a  pension  from  some  of  said  companies ;  and 
provided  further,  that  temporary  suspension,  or  temporary  absence  from 
duty  on  leave,  shall  not  be  construed  as  a  termination  of  a  member's 
employment. 

ARTICLE  XI 

AMENDMENTS 

SECTION  i.  These  By-laws  may  be  altered  or  amended  at  any  regu- 
lar meeting  of  the  Board  of  Trustees,  or  at  a  meeting  called  for  the 
purpose,  provided  that  written  notice  has  been  given  to  each  trustee 
of  the  purpose  to  so  amend  and  that  the  amendment  or  altered  by-laws 
are  passed  by  a  majority  vote  of  the  entire  board. 

CONTRACT 

UNITED  TRACITON  AND  ELECTRIC  COMPANY 

WITH 

UNITED  TRACTION  EMPLOYEES  MUTUAL  AID  ASSOCIATION 
WHEREAS,  an  Association  has  been  organized  under  the  name  of 
the  United  Traction  Employees  Mutual  Aid  Association  by  employees 
of  the  United  Traction  and  Electric  Company  and  of  various   com- 
panies owned,  operated  or  controlled  by  it,  and 

WHEREAS,  the  purposes  and  objects  of  said  Association  are,  as 
more  fully  set  forth  in  its  Constitution  and  By-laws  (to  which  refer- 
ence is  hereby  made),  to  furnish  benefits  during  the  disability  of  its 
members  and  benefits  to  dependents  upon  the  death  of  a  member,  and 


APPENDICES  353 

WHEREAS,  The  United  Traction  and  Electric  Company  is  desirous 
of  aiding  in  the  accomplishment  of  the  purposes  and  objects  of  said 
Association  and  of  co-operating  with  said  Association  in  securing  to 
its  members  and  the  several  companies  by  which  they  are  employed, 
the  mutual  advantages  to  be  derived  from  such  an  Association,  and  of 
providing  in  this  manner,  an  additional  inducement  and  compensation 
to  the  employees  of  said  companies  for  faithful  and  meritorious  ser- 
vice, and 

WHEREAS,  the  said  Association  is  desirous  of  such  aid  and 
co-operation  of  the  United  Traction  and  Electric  Company. 

Now,  THEREFORE,  this  agreement,  made  this  nineteenth  day  of  Octo- 
ber, A.  D.  1901,  by  and  between  the  said  United  Traction  and  Electric 
Company  (hereinafter  called  "the  Traction  Company"  and  the  said 
United  Traction  Employees  Mutual  Aid  Association  (hereinafter 
called  "the  Association")  WITNESSETH  : 

First — The  Association  agrees  that  its  management  shall  always  be 
vested  in  a  board  of  seven  trustees,  four  of  whom  shall  be  chosen  by 
the  directors  of  the  Traction  Company;  and  that  the  contributions  col- 
lected from  members,  and  the  payments  made  to  members  or  other 
beneficiaries  for  death  or  disability  benefits  shall  be  such  and  shall 
be  made  upon  such  terms  and  conditions  as  are  prescribed  by  the 
By-laws  of  said  Association  now  in  force  (a  copy  of  which,  marked 
"Exhibit  A,"  is  hereto  annexed  and  made  a  part  hereof),  and  any 
amendments  thereof  adopted  in  the  manner  therein  provided;  and  that 
the  proceedings  and  government  of  said  Association  shall  be  in  con- 
formity with  said  By-laws  and  amendments. 

Second — The  Traction  Company  agrees  to  contribute  to  the  funds 
of  the  Association  as  follows,  viz. : 

1.  One  hundred  (100)  of  each  five  hundred   (500)   dollars  payable 
at  the  death  of  a  member  of  the  first  class;  one  hundred  and  fifty 
(150)   dollars  of  each  seven  hundred  and  fifty   (750)   dollars  payable 
at  the  death  of  a  member  of  the  second  class;  and  two  hundred  (200) 
dollars  of  each  one  thousand  (1,000)  dollars  payable  at  the  death  of  a 
member  of  the  third  class. 

2.  One-fourth    of   the   amount   of   contributions   by   the   members, 
payable  weekly  as  the  said  amount  may  be  determined. 

3.  Sums,  from  time  to  time,  sufficient  to  meet  the  current  expenses 
of  management,  including  expenses  of  adjusting  and  litigating  claims, 
and 

4.  Sums  equal  to  the  deficiencies  which  may  at  any  time  be  found 


354  INDUSTRIAL  INSURANCE 

to  exist  in  the  funds  of  the  said  Association;  provided  that  contribu- 
tions to  make  good  any  such  deficiencies  shall  be  repaid  out  of  any 
surplus  of  such  funds  as  may  thereafter  be  accumulated. 

Third — The  Traction  Company  further  agrees  to  make  collection 
of  the  contributions  of  the  members  of  the  Association  by  deducting  or 
causing  to  be  deducted  from  their  wages,  pensions,  or  disability  benefits 
as  the  case  may  be,  the  amount  of  such  contributions,  as  fixed  by  the 
By-laws  of  the  Association;  and  to  turn  over,  or  cause  to  be  turned 
over  to  the  Association  the  full  proceeds  of  such  collection  without 
deduction  or  charge. 

Fourth — This  agreement  shall  remain  in  full  force  and  effect  until 
all  obligations  for  benefits  assumed  by  the  Association  in  accordance 
with  its  By-laws  are  discharged;  provided,  however,  that  modifications 
may  be  made  at  any  time  and  from  time  to  time,  if  approved  by  all 
the  trustees  of  the  Association  and  a  majority  of  the  directors  of  the 
Traction  Company. 

IN  WITNESS  WHEREOF,  the  said  United  Traction  and  Electric  Com- 
pany has  caused  its  name  to  be  hereto  subscribed  and  its  seal  to  be 
hereto  affixed,  by  Marsden  J.  Perry,  its  vice-president,  thereunto  duly 
authorized,  the  day  and  year  first  above  written;  and  in  like  witness 
the  said  United  Traction  Employees  Mutual  Aid  Association  has,  on 
the  same  day,  caused  its  name  to  be  hereto  subscribed  and  its  seal  to 
be  hereto  affixed  by  Cornelius  S.  Sweetland,  its  treasurer,  thereunto 
duly  authorized. 

UNITED  TRACTION  AND  ELECTRIC  COMPANY 

By  Marsden  J.  Perry,  Vice-President     (SEAL) 
UNITED  TRACTION  EMPLOYEES  MUTUAL  AID  ASSOCIATION 

By  Cornelius  S.  Sweetland,  Treasurer     (SEAL) 

In  presence  of :    Walter  F.  Angell. 


APPENDIX  G 

RULES  OF  SWIFT  &  CO.  EMPLOYEES  BENEFIT 

ASSOCIATION 
Effective  July  i,  1907 

GENERAL 

1.  The  object  of  Swift  &  Company  Employees  Benefit  Association 
is  the  establishment  and  management  of  a  fund  for  the  payment  of 
definite  amounts  to  such  employees  as  contribute  thereto,  who  shall  be 
known   as   "Members    of   the    Benefit   Association,"   when,    under   the 
rules,  they  are  entitled  to  such  payment  by  reason  of  disability,  or, 
in  the   event   of  their   death,   to   the   relatives    or   other  beneficiaries 
designated. 

2.  Whenever    in   these    rules    the    following   words    occur    without 
qualification  they  shall  h?ve  the  meaning  here  given:     "President"  and 
"Board  of  Directors"  shall  mean  respectively  the  President  and  Board 
of   Directors   of   Swift  &  Company,   an   Illinois   corporation,   its   suc- 
cessors or  assigns.    "Benefit  Association"  shall  mean  Swift  &  Company 
Employees   Benefit  Association.     "Manager,"   "Medical   Director"   and 
"Medical  Examiner,"  shall  mean  the  Manager,  Medical  Director  and 
Medical  Examiner  respectively  of  said  Benefit  Association. 

3.  The  Benefit  Fund  shall  consist  of  contributions  from  members 
of    the    Benefit    Association,    income    from    investments    and    money 
advanced  by  Swift  &  Company,  when  necessary  to  pay  benefits  as  they 
become  due. 

4.  As    Swift  &  Company  have  agreed  with   the   Trustees   of   the 
Benefit  Association  to  pay  the  operating  expenses  thereof  and  to  make 
good  any  deficiency  in  its  funds  to  meet  obligations  to  members,  the 
contributions   from  members  shall  be  used  only  for  the  payment  of 
benefits  due  to  members  of  the  Benefit  Association. 

5.  There  shall  be  an  Advisory  Committee  as  follows: 

The  Treasurer  of  Swift  &  Company  shall  be  ex  officio  a  member 
and  Chairman  of  the  Committee. 

The  other  members  of  the  Committee  shall  be  chosen  annually,  in 
November,  to  serve  for  one  year  from  the  first  day  of  January  next 
succeeding  and  until  their  successors  shall  be  chosen  and  take  office,  as 
follows : 

355 


356  INDUSTRIAL  INSURANCE 

Seven  shall  be  chosen  by  the  Board  of  Directors  and  seven  by  the 
employees  who  are  members  of  the  Benefit  Association  from  among 
themselves,  one  representative  from  the  Chicago  plant  and  one  from 
each  of  the  other  plants  in  rotation,  so  that  each  plant  shall  in  its  turn 
be  represented. 

Ten  members  shall  constitute  a  quorum  of  the  Committee  for  the 
transaction  of  business. 

6.  The  members  of  the  Committee  chosen  by  the  members  of  the 
Benefit  Association  shall  be  elected  by  ballot  from  the  respective  plants 
and   on    such    date    in    November   as    the   Advisory    Committee    shall 
designate.     The  polls  shall  be  open  during  the  business  hours  of  the- 
date  designated  and  the  vote  shall  be  taken  and  certified  under  oath 
by  tellers  selected  by  the  Committee. 

For  the  Committee  to  serve  during  the  first  fiscal  year  the  mem- 
bers to  represent  the  contributing  employees  shall  be  appointed  by  the 
President. 

In  the  event  of  the  termination  of  service  of  any  member  of  the 
Committee,  or  of  his  withdrawal  from  membership  in  the  Benefit 
Association,  his  membership  in  the  Committee  shall  thereupon  termi- 
nate. Any  vacancy  among  the  members  of  the  Advisory  Committee 
elected  by  contributing  employees  shall  be  filled  by  the  member  of  the 
same  packing  plant  who  shall  have  received  the  next  highest  number 
of  votes  to  the  retiring  member,  and  in  the  event  that  no  one  shall  be 
eligible  to  fill  such  vacancy,  a  member  from  the  same  packing  plant 
shall  be  designated  by  the  President. 

Any  vacancy  among  the  members  chosen  by  the  Board  of  Directors 
shall  be  filled  by  appointment  of  the  President. 

Members  shall  serve  until  their  successors  are  chosen  and  take 
office  as  provided. 

The  Manager  shall  be  Secretary  of  the  Committee. 

7.  The  Committee  shall  have  general  supervision  of  the  operation 
of  the  Benefit  Association  and  shall  see  that  it  is  conducted  according 
to  the  Rules. 

The  committee  shall  hold  stated  meetings,  quarterly,  at  Chicago, 
on  the  second  Thursday  of  January,  April,  July,  and  October  in  each 
year,  and  shall  meet  at  other  times  at  the  call  of  the  Chairman.  It 
shall  be  the  duty  of  the  Chairman  to  call  special  meetings  of  the  Com- 
mittee upon  the  written  request  of  five  (5)  of  its  members.  The  neces- 
sary expenses  of  members  of  the  Committee  while  engaged  on  the 
business  of  the  Benefit  Association,  or  traveling  to  or  from  meetings 


APPENDICES  357 

of  the  Committee,  and  the  pay  or  wages  of  such  members  for  such 
time  shall  be  included  in  the  expenses  of  the  Benefit  Association 
assumed  by  Swift  &  Company. 

8.  The  Manager  shall  have  charge  of  all  business  pertaining  to  the 
Benefit  Association.     He  shall  employ  such  clerks  and  other  assistants 
as  may  be  necessary,  prescribe  the  forms  and  blanks  to  be  used,  certify 
all  bills  and  pay-rolls  of  the  Benefit  Association,  furnish  the  Commit- 
tee such  reports   as  they  may  require,   decide   all   questions   properly 
referred  to  him,  and  exercise  such  other  authority  as  may  be  con- 
ferred on  him  by  the  Trustees  or  the  Committee. 

9.  There  may  be  an  Assistant  Manager,  who  shall  exercise  all  the 
authority  of  the  Manager,  in  his  absence,  and  shall  at  all  times  perform 
such  other  duties  as  may  be  assigned  to  him  by  the  Trustees,  Com- 
mittee, or  Manager. 

10.  There  shall  be  a  Medical   Director  who  shall,  subject  to  the 
approval   and   control   of   the   Manager,    appoint    Medical   Examiners, 
assign  them  to  locations,  direct  their  work  and  have  general  super- 
vision of  the  medical  and  surgical  affairs  of  the  Benefit  Association. 
The   Medical   Director  may  be  the  same  person   as  the   Manager   or 
Assistant  Manager. 

The  Manager,  Assistant  Manager,  and  Medical  Director  shall  be 
appointed  by  the  Trustees. 

11.  The    Medical    Examiners    shall    make    the    required    physical 
examination  of  applicants  for  membership  in  the  Benefit  Association, 
prepare  applications,  report  the  condition  of  sick  or  injured  members, 
decide  when  members  are  disabled,  and  when  they  are  ready  for  work, 
certify  bills  for  surgical  treatment,  perform  such  other  duties  as  may 
be  required  of  them  by  the  Medical  Director  and  conform  to  such  rules 
as  he  may  establish. 

12.  Whenever  used  in   these   rules   the   words   "Medical   Officers" 
shall  be  held  to  mean  the  Medical  Examiner  in  charge  of  any  case,  and 
the  Medical  Director. 

13.  The  fiscal  year  of  the  Benefit  Association  shall  begin  with  the 
first  day  of  January  of  each  year. 

At  the  close  of  each  fiscal  year  the  accounts  of  the  Benefit  Fund 
shall  be  audited,  and  the  condition  of  the  Fund  reported  by  competent 
person  or  persons  selected  for  that  purpose  by  those  members  of  the 
Committee  who  represent  the  members  of  the  Benefit  Association. 

14.  Amendments  to  the  rules  of  the   Benefit  Association  may  be 
proposed  to  the  Committee  at  any  quarterly  meeting  by  any  member 


358  INDUSTRIAL  INSURANCE 

of  the  Committee.  Amendments  so  proposed  may  be  acted  upon  only 
at  a  subsequent  meeting.  No  amendment  shall  be  operative  unless 
adopted  by  the  affirmative  vote  of  two-thirds  of  all  the  members  of 
the  Committee,  approved  by  the  Board  of  Directors  and  duly  certified 
by  the  Manager  to  the  Trustees.  Any  amendment  so  adopted,  approved 
and  certified  shall  be  announced  by  the  Manager  and  shall  be  binding 
upon  the  Trustees,  and  upon  the  members  of  the  Benefit  Association, 
and  all  persons  claiming  through  them  from  the  date  specified  in  the 
announcement  thereof. 

MEMBERSHIP 

15.  All  employees  of  Swift  &  Company  who  are  contributing  to 
the  Benefit  Fund  shall  be  called  "Members  of  the  Benefit  Association." 

16.  There  shall  be  eight  (8)   classes  of  members. 

The  highest  class  in  which  an  employee  may  be  a  member  shall  be 
determined  by  his  regular  or  weekly  pay,  as  per  schedule. 

For  employees  paid  by  the  hour,  piece,  or  in  any  other  way  than  by 
the  week,  the  highest  class  shall  be  determined  by  the  usual  amount  of 
earnings  in  a  week. 

17.  No  employee  shall  be  required  to   become  a  member   of   the 
Benefit  Association. 

18.  Any  employee  may,  upon  passing  a  satisfactory  medical  exami- 
nation and  the  approval  of  his  application  by  the  Manager,  become  a 
member  in  the  highest  class  allowed  by  his  pay  or  in  any  lower  class. 
Any  employee  over  forty-five  years  of  age  who  entered  the  employ  of 
Swift  &  Company  prior  to  January  i,  1907,  may,  on  or  before  Decem- 
ber  31,    1907,   upon  passing   a   satisfactory   medical    examination    and 
approval  of  his  application  by  the  Manager,  become  a  member  in  the 
highest  class  allowed  by  his  pay  at  the  same  rates  as  are  prescribed 
for  members  under  forty-five  years  of  age. 

Any  member  forty-five  years  of  age  or  over  who  does  not  take 
advantage  of  this  provision  on  or  before  December  31,  1907,  or  who 
enters  the  employ  of  Swift  &  Company  on  or  after  January  i,  1907, 
may  become  a  member  in  the  highest  class  allowed  by  his  pay  at  the 
rates  provided  in  the  schedule  for  employees  forty-five  years  of  age 
and  over. 

ADDITIONAL  DEATH  BENEFITS 

19.  A  member,  upon  executing  the  proper  form  of  application,  and 
passing  a  satisfactory  medical  examination  and  approval  of  his  appli- 
cation by  the  Manager,  may  contribute  as  per  schedule  for  additional 


APPENDICES  359 

death  benefits  not  greater  in  the  aggregate  than  the  death  benefit  of 
the  class  he  enters. 

20.  Any  member  not  over  forty-five  years  of  age  may,  upon  exe- 
cuting the  proper  form  of  application  and  passing  a  satisfactory  medical 
examination,  and  approval  of  his  application  by  the  Manager,  change 
to  any  higher  class  allowed  by  his  pay. 

21.  Any  member  may,  upon  executing  the  proper  form  of  applica- 
tion, change  to  a  lower  class. 

22.  An  employee  cannot  remain  a  member  in  a  class  higher  than 
that  allowed  by  his  pay  except  as  to   death   benefit.     If   a  member 
declines   to   effect   a   proper   reduction    of   class   when   necessary,    the 
Manager  shall  have  authority  to  cancel  his  membership. 

23.  Any  member  may  withdraw   from  the   Benefit  Association   at 
the  end  of  any  week  upon  giving  notice  before  Tuesday  of  that  week. 

24.  Any  member  who  is  temporarily  relieved  from  service   for  a 
period  not  exceeding  four  weeks  may  retain  his  membership  during 
such  absence  by  paying  his  contributions  in  advance. 

25.  When  a  member  resigns   from  the  service,  leaves  the  service 
without  notice,  or  is  relieved  or  discharged  therefrom   (or  is  relieved 
from  service  for  a  period  longer  than  four  weeks),  his  membership  in 
the  Benefit  Association  shall  cease  with  his  employment,  and  he  shall 
not  be  entitled  to  any  benefits  for  time  thereafter,  except  such  as  he  may 
be  entitled  to  by  reason  of  disability  beginning  and  reported  before 
and  continuing  without  interruption  to  and  after  such  termination  of 
employment;  provided,  however,  that  any  member  who  has  been  in 
the  employ  of  Swift  &  Company  for  three  years,  and  a  member  of 
the  Benefit  Association  for  one  year  immediately  preceding  the  termi- 
nation of  his  employment,  may  continue  his  membership  thereafter  in 
respect  only  of  the  minimum  death  benefit  he  has  held  at  any  time 
during  the  last  year  of  such  employment,  or  of  any  smaller  amount 
upon    making   supplementary   application   therefor   on   the   prescribed 
form  before  termination  of  employment  or  within  five  days  thereafter. 

26.  Membership   in  the   Benefit   Association   shall   be   based   upon 
an  application  in  the  following  form: 

APPLICATION    FOR    MEMBERSHIP    IN    SWIFT    &    COMPANY    EMPLOYEES 
BENEFIT  ASSOCIATION 

To  the  Manager  of  Swift  &  Company  Employees  Benefit  Association: 

I, of ,  in  the  County  of and  State  of , 

now    employed    by    Swift    &    Company,    do    hereby    apply    for    membership 
in    Swift    &    Company    Employees    Benefit    Association,    and    consent    and 


360  INDUSTRIAL  INSURANCE 

agree  to  be  bound  by  the  Rules  of  said  Benefit  Association,  which  Rules 
I  have  read  or  have  had  read  to  me,  and  by  any  other  Rules  of  said  Benefit 
Association  hereafter  adopted  and  in  force  during  my  membership,  and 
by  the  provisions  of  the  Deed  of  Trust  governing  the  organization  of  the 
Benefit  Association,  and  the  amendments  thereto. 

I  also  agree,  request  and  direct  that  Swift  &  Company,  by  its  proper 
agents,  and  in  the  manner  provided  for  in  such  Rules,  shall  apply  as  a 
voluntary  contribution  from  any  wages  earned  by  me  under  said  employ- 
ment the  sum  of ($  -100)  per  week,  for  the  purpose  of  securing 

the  benefits  provided  in  the  Rules  for  a  member  of  the  Benefit  Association 

of  the class  with additional  death  benefits  of  the  first  class. 

Unless  I  shall  hereafter  otherwise  designate  in  writing,  with  the  approval 
of  the  Manager  of  the  Benefit  Association,  death  benefit  shall  be  payable 
to  my  wife  (husband),  if  I  am  married  at  the  time  of  my  death;  or  if  I 
have  no  wife  (husband)  living,  then  to  my  children,  collectively,  each  to  be 
entitled  to  an  equal  share,  encluding,  as  entitled  to  the  parent's  share,  the 
issue  of  any  dead  child;  or  if  there  be  no  children  or  such  issue  living, 

then  to if  living ;  and  if  not  living,  to  "my  father  and  mother 

jointly,  or  their  survivor;  or  if  neither  be  living,  then  to  my  next  of  kin, 
payment  in  behalf  of  such  next  of  kin  to  be  made  to  my  legal  representa- 
tives ;  or  if  there  be  no  such  next  of  kin,  the  death  benefit  shall  lapse,  and 
the  amount  thereof  shall  remain  as  part  of  the  Benefit  Fund,  and  no  one 
claiming  under  me  shall  have  any  right  or  interest  therein. 

I  also  agree  that  this  application,  upon  the  approval  of  the  Manager  of 
the  Benefit  Association,  shall  make  me  a  member  of  the  Benefit  Associa- 
tion on  and  from  the  date  specified  in  such  approval,  and  that  such 
membership  shall  not  be  avoided  by  any  change  in  the  character  of  my 
service,  or  locality  where  rendered,  while  in  the  employment  of  said 
Swift  &  Company,  nor  by  any  change  in  the  amounts  applicable  from  my 
wages  to  the  Benefit  Fund  to  which  I  may  hereafter  consent,  and  that  the 
agreement  that  the  above  named  amounts  shall  be  deducted  from  my 
wages  shall  apply  also  to  any  other  amounts  which  I  may  agree  to  pay 
under  the  provisions  of  said  Rules,  by  reason  of  changes  made  as  aforesaid. 

I  also  agree,  for  myself  and  those  claiming  through  me,  to  be  governed 
by  the  Rule,  or  Rules,  providing  for  final  and  conclusive  settlement  of  all 
claims  for  benefits  or  controversies  of  whatever  nature  by  reference  to 
the  Manager  of  the  Benefit  Association,  and  an  appeal  from  his  decision 
to  the  Advisory  Committee. 

I  certify  that  I  am  correct  and  temperate  in  my  habits ;  that,  so  far 
as  I  am  aware,  I  am  now  in  good  health,  and  have  no  injury  or  disease, 
constitutional  or  otherwise,  except  as  shown  on  the  accompanying  state- 
ment made  by  me  to  the  Medical  Examiner,  which  statement  shall  constitute 
a  part  of  this  application. 

I  also  agree  that  any  untrue  or  fraudulent  statement  made  by  me  to 


APPENDICES  361 

the  Medical  Examiner,  or  any  concealment  of  facts  in  this  application,  or 
any  attempt  on  my  part  to  defraud  or  impose  upon  said  Benefit  Association, 
or  my  resigning  from  or  leaving  the  service  of  said  Swift  &  Company, 
or  my  being  relieved  or  discharged  therefrom,  shall  forfeit  my  membership 
in  the  said  Benefit  Association,  and  all  rights,  benefits,  or  equities  arising 
therefrom ;  except  that  such  termination  of  my  employment  shall  not  (in 
the  absence  of  any  of  the  other  foregoing  causes  of  forfeiture)  deprive  me 
of  any  benefits  to  the  payment  of  which  I  may  be  entitled  by  reason  of 
disability,  beginning  and  reported  before  and  continuing  without  interrup- 
tion to  and  after  such  termination  of  my  employment,  nor  of  the  right  to 
continue  my  membership  in  respect  of  death  benefit  only,  as  provided  in 
said  Rules. 

In  witness  whereof,  I  have  signed  these  presents  at ,  in  the 

County  of ,  State  of ,  this day  of A.  D.  190 

this  application  to  take  effect  on  such  date  as  may  be  designated  by  said 
Manager. 

The  following  changes  made  before  said  execution : 

Witness : 

The  foregoing  application  is  approved  at  the  office  of  the  Manager  of 
Swift  &  Company  Employees  Benefit  Association  at  Chicago,  in  the  County 

of  Cook,  State  of  Illinois,  this day  of A.  D.  190....,  to 

take  effect  the day  of ,  A.  D.  190. . .. 


Manager  of  Benefit  Association 

The  application,  accompanied  by  the  report  of  the  Medical  Exami- 
ner, shall  be  forwarded  to  the  Manager,  and,  upon  approval  by  him, 
the  applicant  shall  become  a  member  from  as  early  a  date  as  notice 
of  approval  can  reach  him — and  the  Manager  shall  issue  to  him  a 
certificate  of  membership. 

27.  If  any  applicant  for  membership  or  for  change  in  membership 
has  physical  defects  which  would  preclude  the  approval  of  his  appli- 
cation, if  presented   unconditionally,   his  application  may  nevertheless 
be   approved;    provided,   that   he    executes    an   agreement   in    writing, 
satisfactory  to  the  Manager,  to  the  effect  that  he  shall  not  be  entitled 
under  his  membership  to  any  benefits  for  disability  caused  by,  arising 
from,  or  growing  out  of  such  defects,  such  agreement  to  be  attached 
to  and  to  be  made  a  part  of  his  said  application,  and  such  modification 
of  the  prescribed  forms  of  application  is  hereby  authorized. 

28.  The  application  of  a  married  woman  must  be  signed  also  by 
her  husband,  and  that  of  a  minor  by  the  father,  or  if  the  father  be 


362  INDUSTRIAL  INSURANCE 

not  living  or  be  not  the  head  of  the  family,  by  the  mother  or  the 
legal  guardian  unless  otherwise  ordered  by  the  Manager. 

CONTRIBUTIONS 

29.  The  word  "Contributions''  wherever  used  in  these  Rules  shall 
be  construed  to  mean  such  designated  portion  of  the  wages  payable  by 
Swift  &  Company  to  an  employee  as  he  shall  have  agreed  in  his  appli- 
cation that  Swift  &  Company  shall  apply  for  the  purpose  of  securing 
to  him  the  benefits  of  the  Benefit  Association,  or  such  cash  payment 
as  it  may  be  necessary  for  a  member  to  make  for  said  purpose. 

30.  Contributions  shall  be  made  weekly  or  fortnightly  in  advance 
at  rates  as  provided  for   in  schedule.     Contributions    from   members 
not  in  service  but  continuing  death  benefit  shall  be  payable  quarterly 
in  advance. 

31.  Contributions   for  any  week  or   fortnight  will  be  due  on  the 
first  day  of  that  week  or  fortnight,  and  will  ordinarily  be  deducted 
for  the  ensuing  week  or  fortnight  from  the  member's  wages  on  the 
pay-roll  for  the  preceding  week  or  fortnight. 

When  a  member  has  no  wages  on  the  pay-roll  any  contributions 
clue  from  him  must  be  made  in  cash,  otherwise  he  will  be  in  arrears. 
A  member  in  the  service  shall  make  such  cash  payments  to  the 
Manager  through  the  Cashier  of  the  plant  at  which  he  belongs. 

A  member  who  has  left  the  service  and  is  contributing  for  death 
benefits  only  shall  make  such  cash  payments  direct  to  the  Manager. 

32.  Benefits  shall  not  be  due  on  account  of  disability  beginning  or 
death  occurring  while  a  member  is  in  arrears. 

When  a  member  is  in  arrears  for  two  months  his  membership 
shall  cease  and  he  shall  have  no  further  right  or  claim  against  the 
Benefit  Association. 

33.  When  a  member  recovers  from  his  disability  his  contributions 
for  the  week  in  which  he  recovers,  if  not  already  paid,  together  with 
his  contribution  for  the  following  week  or  fortnight,  shall  be  deducted 
from  the  pay-roll  of  the  week  in  which  he  recovers. 

34.  A  member  shall  not  make  contributions  for  any  time  of  disa- 
bility beyond  the  week  or  fortnight  in  which  disability  begins,  except 
as  specifically  provided  in  the  Rules.     When  wages  are  paid  during 
disability  the  usual  contributions  shall  be  made. 

35.  When  a  member's  service  terminates  there  shall  be  due  him  as 
refund  any  excess  of  contribution  he  may  have  made  above  what  is 
necessary  to  adjust  his  account  up  to  the  termination  of  his  service. 


APPENDICES  363 

Any  such  refund   shall  be  payable  upon  application  therefor  by  the 
member. 

DISABILITY 

36.  Wherever  used  in  these  rules  the  word  "Disability"   shall  be 
held  to  mean  physical  inability  to  work  by  reason  of  sickness  or  acci- 
dental injury,  and  the  word  "Disabled"  shall  apply  to  members  thus 
physically  unable  to  work. 

The  decision  as  to  when  members  are  disabled  and  when  they 
x$re  able  to  work  shall  rest  with  the  Medical  Officers  of  the  Associa- 
tion, and  their  decision  shall  be  final  and  binding  upon  the  member, 
subject  to  the  provisions  of  sec.  52. 

In  considering  the  question  of  disability,  subjective  symptoms  or 
alleged  symptoms  will  be  given  due  weight,  but  these,  in  themselves, 
unsupported  by  objective  or  discoverable  symptoms,  shall  not  entitle 
a  member  to  be  considered  disabled. 

BENEFITS 

The  following  benefits  shall  be  paid  to  members  or  beneficiaries 
entitled  thereto,  in  accordance  with  the  provisions  of  the  Rules. 

ACCIDENT    BENEFITS 

37.  Payment   for   each   week    (or,   proportionately,    for   part   of   a 
week,  excluding  Sunday)   of  disability  classed  as  due  to  accident  for 
a  period  not  longer  than  104  weeks,  at  benefits  as  per  schedule.     Also 
payment  to  or  in  behalf  of  the  member  of  such  an  amount  for  neces- 
sary surgical  treatment  as  may  be  approved  by  the  Medical  Director. 
No  member  shall  have  authority  to  contract  bills  against  the  Benefit 
Association  and  nothing  herein  shall  be  held  to  mean  or  imply  that 
the  Benefit  Association  shall  be  responsible  for  the  payment  of  such 
bills  as  a  member  may  contract,  or  his  surgeon  may  charge.     Bills 
for  surgical  attendance  to  be  considered  by  the   Benefit  Association 
must  be  made  out  against  the  member  and   must  be   itemized.     To 
establish  a  claim  for  accident  benefits,  the  accident  must  be  reported 
immediately  upon  its  occurrence,  and  there  must  be  external  positive 
and  visible  evidence  of  physical  injury  by  accident  sufficient  to  cause 
immediate  disability.     In  cases  of  alleged  sprain,  strain,  wrench,  and 
the   kind,   where   physical   proof    of    disabling   injury   is    lacking,    the 
member  must  furnish  substantiated  history  satisfactory  to  the   Man- 
ager,  of  violence  accidentally  inflicted,  sufficient  and  liable   to   cause 
disabling  injury,  otherwise  accident  benefit  will  not  be  allowed. 

When  a  member  meets  with   any  accident   from  which   disability 


364  INDUSTRIAL  INSURANCE 

may  result  and  on  account  of  which  he  wishes  to  reserve  the  right  to 
claim  accident  benefits,  he  shall  report  the  accident  to  his  timekeeper 
immediately  upon  its  occurrence,  and  also  report  in  person  to  the 
Medical  Examiner  the  same  as  is  provided  in  cases  of  actual 
disability. 

If  a  member  receives  accidental  injuries  producing  the  immedi- 
ate severing  of,  or-  necessitating,  in  the  opinion  of  the  Medical  Officers 
of  the  Benefit  Association,  the  amputation  of  a  hand  or  foot  at  or 
above  the  wrist  or  ankle,  he  may  either  receive  weekly  benefits  and 
payment  of  surgical  bills,  as  hereinbefore  provided,  also  an  artificial 
limb,  when  such  can  be  worn,  or  in  lieu  thereof  and  in  full  of  all 
claims  or  demands  of  whatsoever  nature  against  the  Benefit  Asso- 
ciation, arising  from  such  injuries,  he  may  receive  as  per  schedule — 
and  twice  these  benefits  are  provided  in  schedule  in  case  of  loss  of 
both  hands  or  both  feet,  or  of  one  hand  and  one  foot. 

If  a  member  receives  accidental  injuries  resulting  in  the  total  loss 
of  sight  of  one  eye,  he  may  either  receive  weekly  benefits  and  payment 
of  surgical  bills,  as  hereinbefore  provided,  or  in  lieu  thereof  and  in 
full  of  all  claims  or  demands  of  whatsoever  nature  against  the  Benefit 
Association,  arising  from  such  injuries,  he  may  receive  as  per  schedule 
— and  twice  these  benefits  are  provided  in  schedule  in  case  of  total  loss 
of  sight  of  both  eyes. 

SICK  BENEFITS 

38.  Payment  for  each  week,  except  the  first  six  working  days 
(or  proportionately  for  part  of  a  week,  excluding  Sundays)  of  disa- 
bility classed  as  due  to  sickness,  for  a  period  not  longer  than  fifty- 
two  weeks,  at  the  same  benefits  as  for  accident  benefits,  and  at  half 
such  benefits  for  an  additional  period  of  fifty-two  weeks. 

When  a  member  shall  have  received  full  benefits  for  fifty-two 
weeks  and  half  benefits  for  fifty-two  weeks  additional  for  sickness 
disability  from  the  Benefit  Fund,  he  shall  not  be  entitled  to  further 
disability  benefits. 

To  establish  a  claim  for  sick  benefits  there  must  be  positive  evi- 
dence of  acute  or  constitutional  disease  sufficient  to  cause  disability. 

Disability  resulting  from  infection  of  a  cut,  abrasion,  scratch, 
puncture  or  other  wound,  or  from  any  injury  not  immediately  dis- 
abling and  not  reported  at  the  time  of  the  accident  causing  the  injury, 
or  from  poison  however  taken  into  or  acting  upon  the  body,  or  from 
any  overdose  of  medicine  or  drug  taken  by  mistake;  or  from  sur- 
gical operation  necessary  for  the  removal  of  some  defect,  which 


APPENDICES  365 

would  otherwise   produce   disability,   or   from   sunstroke,   or   frostbite 
shall  be  classed  as  due  to  sickness. 

39.  A  member  shall  not  be  entitled  to  receive  benefits  continuously 
for  more  than  104  weeks  for  any  disability. 

40.  A  member  who  has   received  sick  benefits  to  the   full  extent 
contemplated  by  these   Rules,   may   retain  his  membership   in  respect 
to  death  benefit  only  by  contributing  for  the  same,  such  contributions 
to  begin  at  the  expiration  of  his  right  to  sick  benefits,  otherwise  his 
membership  shall  cease. 

41.  In  case  of  any  grave  injury  or  chronic  sickness  where  a  mem- 
ber desires  to  accept  a  lump  sum  in  lieu  of  the  benefits  which  might 
become  due  him  or  on  his  account,  and  in  full  of  all  obligations  of 
the   Benefit  Association   arising    from   his   membership,   the    Manager 
shall  have  authority  to  make  full  and  final  settlement  with  such  mem- 
ber  on   such   terms    as    may   be    agreed   upon    in   writing.     All    such 
settlements  shall  be  reported  to  the  Committee  at  their  next  meeting. 

42.  Benefits  on  account  of  continued  disability  will  be  paid   fort- 
nightly.    Benefits  for  short  periods  of  disability  will  be  paid  as  soon 
as  the  amount  due  can  be  ascertained. 

Benefits  shall  be  payable  only  to  the  disabled  member  or  in 
accordance  with  his  written  order,  when  approved  by  the  Manager  or 
his  legal  representative;  but  payment  for  surgical  treatment  may  be 
made  to  the  attending  surgeon. 

When,  in  the  opinion  of  the  Manager,  a  member  is  legally  incom- 
petent, disability  benefits  due  him  may,  at  the  discretion  of  the 
Manager,  be  paid  to  his  wife  or  to  some  other  member  of  his  family 
for  the  use  and  benefit  of  the  member,  and  such  payments  shall  be 
made  a  bar  to  any  subsequent  claim  on  the  part  of  the  member  or  his 
legal  representative  for  amounts  so  paid. 

43.  When  a  member  becomes   disabled,  he   shall  notify  his   time- 
keeper  immediately  or  cause   him  to  be   notified.     In   reporting   dis- 
ability, the  member  shall  give  his  house  address.     If  he  fails  to  give 
notice  until  he  recovers,  he  shall  not  be  entitled  to  benefits  unless  he 
proves   his   disability  to   the   satisfaction   of   the   Manager,   and   gives 
satisfactory   reason    for    failure   to   give   notice.      If, he   gives    notice 
during  disability,  but  delays  in  so  doing,  he  shall  not  be  considered 
disabled  before  the   day  on  which  notice   is  given,   unless  he  proves 
his  disability  before  that  day  to  the  satisfaction  of  the  Manager,  and 
gives  satisfactory  reason  for  delay  in  giving  notice. 

When  a  member  becomes  disabled  he  shall,  also,  unless  unable  on 


366  INDUSTRIAL  INSURANCE 

account  of  his  disability,  report  immediately  to  the  Medical  Examiner 
at  his  office  during  business  hours.  A  disabled  member  not  confined 
to  the  house  by  his  disability,  shall  also  report  at  the  Medical  Exami- 
ner's office  from  time  to  time  as  requested,  and  keep  any  other 
appointments  made  by  the  Examiner.  Members  who  avoid  the 
Medical  Examiner  or  neglect  to  report  or  keep  appointments  shall  not 
be  entitled  to  benefits. 

If  a  member  who  has  been  reported  as  able  to  work  by  the 
Medical  Examiner,  is  not  able  to  work  on  the  day  set,  he  shall 
immediately  notify  his  timekeeper,  and  the  Medical  Examiner,  and 
report  to  the  latter  in  person,  if  possible;  otherwise  he  shall  not  be 
considered  disabled  after  the  day  set  for  his  return  to  work. 

44.  When    a   member   becomes    disabled    when   away    from   home, 
whether  on  business   for  Swift  &  Company  or  leave  of  absence,  he 
shall  not  be  entitled  to  benefits  unless  he  reports  his  disability  immedi- 
ately and  proves  it  to  the  satisfaction  of  the  Manager. 

45.  When    a    disabled    member    wishes    to    leave    home,    he    shall 
obtain  from  the  Medical  Examiner  written  approval  of  absence  for  a 
specific  time,  shall  furnish  him  satisfactory  proof  of  disability,  while 
absent,  and  report  immediately  to  him  on  his   return,   otherwise   he 
shall  not  receive  benefits  while  absent. 

46.  Benefits  shall  not  be  payable  for  disability  directly,  indirectly 
or   partly   due   to   intoxication,   or   to   use    of    alcoholic   liquors   as    a 
beverage,    or   to   immoderate   use    of    stimulants    or    narcotics,    or   to 
unlawful  acts  or  immoralities,  or  to  venereal  diseases,  however  con- 
tracted, or  to  the  results  thereof,  or  to  urethritis,   orchitis,   epididy- 
mitis,  stricture,  or  glandular  swelling,  or  abscess  in  the  groin,  how- 
ever caused,  or  to  fighting,  unless  in  self-defense  against  unprovoked 
assault,  or  other  encounter,  such  as  wrestling,   scuffling,   fooling  and 
the  like,  or  to  injury  received  in  any  brawl,  or  in  any  liquor  saloon, 
gambling  house  or  other  disreputable  resort. 

During  disability  coming  under  this  Rule  a  member  shall  con- 
tribute for  and  be  entitled  to  death  benefit  only. 

47.  Members  shall  not  be   entitled  to  benefits   if   they   decline   to 
permit  the  Medical   Examiner  to  make  or  have  made  by  any  other 
physician,  such  examination  as  he  may  deem  necessary  to   ascertain 
their  condition  when  claiming  disability. 

Disabled  members  must  take  proper  care  of  themselves  and  have 
proper  treatment.  Benefits  will  be  discontinued  to  members  who 
refuse  or  neglect  to  follow  the  recommendations  of  the  Medical 
Officers. 


APPENDICES  367 

DEATH    BENEFITS 

48.  Payment  in  accordance  with  the  conditions  prescribed  in  the 
Rules  upon  the  death  of  a  member,  as  per  schedule. 

49.  Death    benefit,    together    with    any    unpaid    disability    benefits, 
shall  be  payable  to  the  beneficiary  of  a  deceased  member  upon  proof 
of  claim.     A  part  of  the  death  benefit,  not  to  exceed  $100,  may,  at 
the    discretion   of   the    Manager,   be   paid    before    final    settlement   to 
meet   funeral   or   other  urgent   expenses,   incident  to   the   death   of   a 
member. 

50.  If  a  member  commits  suicide  before  the  end  of  the  first  year 
of  his  membership,  the  beneficiary  shall,  upon  proof  of  claim,  receive 
such  amount  only  as  such  member  has  contributed  for  death  benefit 
under  the  Rules  at  time  of  death,  and  such  amount  shall  be  in  full 
satisfaction  of  all  claims. 

51.  Claims  for  disability  benefits  must  be  made  within  thirty   (30) 
days  of  the  time  such  benefits  accrue.     Claims  for  death  benefits  must 
be  made  within  two  (2)  years  from  the  death  of  the  member. 

CONTROVERSY 

52.  In  any  controversy,  claim,  demand,  suit-at-law,  or  other  pro- 
ceeding between  any  member,  his  beneficiary  or  legal  representative, 
and  the  Benefit  Association,  the  certificate  of  the  Manager  as  to  any 
facts  appearing  in  the  records  of  the  Benefit  Association,  or  of  Swift 
&  Company,  or  that  any  writing  is  a  copy  taken  from  said  records, 
or    of    any   instrument   on   file    in   said    Benefit   Association,   or   with 
Swift  &  Company,  or  that  any  action  has  or  has  not  been  taken  by 
the  Committee,  or  the  Board  of  Directors,  shall  be  prima  facie  evi- 
dence of  the  facts  therein  stated. 

All  questions  or  controversies  of  whatsoever  character  arising 
in  any  manner,  or  between  any  parties  or  persons,  in  connection  with 
the  Benefit  Association  or  the  operation  thereof,  whether  as  to  any 
claim  for  benefits  preferred  by  any  member  or  his  legal  representa- 
tive or  his  beneficiary  or  any  other  person,  or  whether  as  to  the  con- 
struction of  language  or  meaning  of  the  Rules,  or  as  to  any  writing, 
decision,  instruction  or  acts  in  connection  with  the  operation  of  the 
Benefit  Association,  shall  be  submitted  within  sixty  (60)  days  of  the 
time  of  the  decision  from  which  an  appeal  is  taken,  to  the  Manager, 
whose  decision  shall  be  final  and  conclusive,  unless  an  appeal  from 
such  decision  shall  be  taken  to  the  Committee  within  thirty  (30)  days 
after  notice  of  such  decision  to  the  parties  interested. 


368  INDUSTRIAL  INSURANCE 

When  an  appeal  is  taken  to  the  Committee  it  shall  be  heard  by 
said  Committee  without  further  notice  at  their  next  stated  meeting, 
or  at  such  future  meeting  or  time  as  they  may  designate,  and  shall 
be  determined  by  a  vote  of  the  majority  of  a  quorum,  or  of  any  other 
number  not  less  than  a  quorum  of  the  members  present  at  such  meet- 
ing, and  the  decision  of  the  Committee  shall  be  final  and  conclusive 
upon  all  parties,  without  exception  or  appeal. 

DEED   OF   TRUST 

THIS  DEED  OF  TRUST,  Made  this  First  day  of  July,  A.  D.  1907, 
by  and  between  EDWIN  L.  WARD,  HENRY  C.  THOM,  HORACE  C.  GARDNER, 
CHARLES  O.  YOUNG,  FRANK  S.  HAYWARD,  CHARLES  A.  PEACOCK,  ROBERT 
C.  McMANus,  ARTHUR  D.  WHITE,  JOHN  M.  CHAPLIN,  GEORGE  A.  COLLOM, 
ROBERT  L.  BURNS,  THOMAS  J.  MCAFFEE,  RICHARD  W.  HOWES,  HERBERT  J. 
NELSON  and  DAVID  H.  GIFFORD,  parties  of  the  first  part,  and  Louis  F. 
SWIFT,  EDWARD  F.  SWIFT,  CHARLES  H.  SWIFT,  D.  EDWIN  HARTWELL  and 
EDWARD  TILDEN,  parties  of  the  second  part,  all  of  the  City  of  Chicago, 
County  of  Cook  and  State  of  Illinois,  WITNESSETH  : 

WHEREAS,  The  said  parties  of  the  first  part  are  desirous  of  providing 
for  themselves  and  such  other  persons  who  shall  become  beneficiaries 
under  this  Deed  of  Trust,  benefits  in  case  of  sickness,  accident  or  death, 
and  for  that  purpose  are  desirous  of  providing  for  the  safe-keeping  and 
management  of  all  funds  that  may  be  obtained  or  contributed  for  said 
purposes ;  and, 

WHEREAS,  The  said  parties  of  the  first  part  have  requested  the  said 
parties  of  the  second  part  to  act  as  first  trustees  of  the  said  funds  which 
shall  accrue  hereunder  for  the  purposes  aforesaid ;  and, 

WHEREAS,  The  parties  of  the  second  part  have  agreed  to  act  as  first 
trustees  under  this  agreement,  as  hereinafter  provided,  for  the  purposes 
aforesaid ;  and, 

WHEREAS,  It  is  desired  by  this  Deed  of  Trust  to  definitely  state  the 
terms  of  this  Trust  and  the  plan  of  providing  for  such  benefits  in  case  of 
sickness,  accident  or  death ; 

Now,  THEREFORE,  In  consideration  of  the  premises,  it  is  agreed  as 
follows : 

FIRST.  The  purpose  of  this  Deed  of  Trust  is  to  provide  for  the 
establishment  of  a  voluntary  association,  which  shall  be  known  as  Swift 
&  Company  Employees  Benefit  Association,  and  also  to  provide  for  the 
custody,  management  and  investment  of  the  funds  of  said  Association,  and 
for  the  payment  out  of  said  funds  of  definite  amounts  to  such  persons  as 
contribute  thereto,  and  who  shall  be  known  as  "Members  of  the  Benefit 
Association,"  when,  under  the  Rules  of  the  said  Association,  they  are 
entitled  to  such  payment,  by  reason  of  disability,  and  also  in  the  event  of 


APPENDICES  369 

the  death  of  a  member,  for  the  payment  of  the  amounts  provided  by  the 
Rules  of  said  Association  to  the  person  or  persons  designated  by  him, 
or  the  person  legally  entitled  thereto. 

SECOND.  The  funds  of  this  Association  shall  consist  of  contributions 
from  members  and  from  all  other  sources  and  interest  paid  thereon. 

THIRD.  The  general  conduct  of  the  business  of  said  Association  shall 
be  under  the  direction  of  an  Advisory  Committee,  which  shall  consist  of 
fifteen  (15)  members,  and  after  December  31,  1907,  shall  be  made  up  as 
follows : 

The  Treasurer  of  Swift  &  Company,  a  corporation  organized  under 
the  laws  of  the  State  of  Illinois,  shall  be  ex-officio  a  member  and  Chairman 
of  said  Committee. 

The  other  members  of  the  Advisory  Committee  shall  be  chosen  annually, 
in  November,  to  serve  for  one  year  from  the  first  day  of  January,  next 
succeeding,  and  until  their  successors  shall  be  chosen  and  assume  office. 

Seven  of  said  members  shall  be  chosen  by  the  Board  of  Directors 
of  said  Swift  &  Company,  and  the  remaining  seven  by  the  employees 
who  are  members  of  the  Benefit  Association  from  among  themselves,  from 
such  plants  as  shall  be  designated,  from  time  to  time,  by  the  Advisory 
Committee. 

FOURTH.  The  members  of  the  Advisory  Committee,  chosen  by  the 
members  of  the  Benefit  Association,  shall  be  elected  by  ballot,  the  vote 
being  taken  and  certified  by  tellers  of  the  different  plants,  designated  by 
the  Advisory  Committee,  and  the  polls  shall  be  kept  open  for  balloting 
during  the  business  day  at  each  plant. 

FIFTH.  For  the  year  ending  December  3ist,  1907,  the  members  of 
the  Advisory  Committee  shall  be  as  follows : 

Laurence  A.  Carton,  Chairman ;  Charles  O.  Young,  Horace  C.  Gardner, 
Frank  S.  Hayward,  George  A.  Collom,  Henry  C.  Thorn,  Robert  C.  Mc- 
Manus,  Richard  W.  Howes  and  Frank  Stout,  all  of  the  City  of  Chicago, 
State  of  Illinois ;  Richard  C.  Annan,  of  the  City  of  St.  Joseph,  State  of 
Missouri ;  James  Frank  Cecil,  of  the  City  of  Kansas  City,  State  of 
Missouri;  William  McKinley,  of  the  City  of  East  St.  Louis,  State  of 
Illinois;  Peter  T.  Powers,  of  the  City  of  Omaha,  State  of  Nebraska; 
George  Heimel,  of  the  City  of  St.  Paul,  State  of  Minnesota,  and  John 
Brennan,  of  the  City  of  Ft.  Worth,  State  of  Texas. 

SIXTH.  In  the  event  of  the  termination  of  the  service  for  Swift  & 
Company,  or  of  his  membership  in  the  Benefit  Association,  of  any  member 
of  the  Advisory  Committee,  his  membership  in  the  Advisory  Committee 
shall  thereupon  cease. 

Any  vacancy  among  the  members  of  the  Advisory  Committee,  elected 
by  the  contributing  employees,  shall  be  filled  by  the  member  of  the  same 
packing  plant  at  which  the  retiring  member  was  employed  at  the  date  of  his 
election,  who  shall  have  received  the  next  highest  number  of  votes  to 


370  INDUSTRIAL  INSURANCE 

the  retiring  member,  and  in  the  event  that  no  one  shall  be  eligible  as 
aforesaid  to  fill  such  vacancy,  a  member  from  the  same  packing  plant 
shall  be  designed  by  the  President  of  said  Swift  &  Company. 

The  President  of  said  Swift  &  Company  shall  also  fill  any  vacancy 
among  the  members  of  the  Advisory  Committee  chosen  by  the  Board  of 
Directors  of  Swift  &  Company. 

Each  member  of  the  Advisory  Committee  shall  serve  until  his  suc- 
cessor is  chosen  and  takes  office. 

The  Manager  of  the  Association  shall  be  Secretary  of  the  Advisory 
Committee  and  shall  have  charge  of  its  records. 

SEVENTH.  The  Advisory  Committee  shall  have  general  supervision 
over  the  operations  of  the  Association,  and  shall  see  that  it  is  conducted 
in  accordance  with  the  provisions  of  this  Deed  of  Trust,  and  the  Rules 
and  Regulations  adopted  by  said  Committee. 

A  majority  vote  shall  be  necessary  for  the  determination  of  the 
action  of  said  Advisory  Committee  and  it  may  make  such  rules  and  regu- 
lations, for  the  conduct  of  the  business  of  the  Association  as  it  may  see 
fit,  not  inconsistent  with  the  provisions  of  this  Deed  of  Trust. 

EIGHTH.  The  Advisory  Committee  shall  hold  stated  meetings  quart- 
erly at  Chicago,  on  the  second  Thursday  of  January,  April,  July,  and 
October,  in  each  year,  and  shall  meet  at  other  times  at  the  call  of  the 
Chairman  thereof,  and  it  shall  be  the  duty  of  said  Chairman  to  call 
a  meeting  at  the  written  request  of  five  members  of  the  Advisory  Com- 
mittee. 

NINTH.  The  Trustees  of  the  Association  shall  appoint  a  Manager, 
who  shall  have  charge  of  all  business  pertaining  to  the  Association,  and 
shall  employ  such  clerks  and  other  assistants  as  may  be  necessary,  prescribe 
the  forms  and  blanks  to  be  used,  certify  all  bills  and  pay-rolls,  and  furnish 
the  Advisory  Committee  with  such  reports  as  they  may  require,  decide  all 
questions  properly  referred  to  him,  and  exercise  such  other  authority  as 
may  be  conferred  on  him  by  the  Trustees  or  the  Advisory  Committee. 

TENTH.  The  said  Trustees  may  also  appoint  an  Assistant  Manager, 
who  shall  exercise  all  of  the  authority  of  the  Manager  in  his  absence, 
and  shall  at  all  times  perform  such  other  duties  as  may  be  assigned  to 
him  by  the  Trustees,  Advisory  Committee  or  the  Manager. 

ELEVENTH.  The  said  Trustees  shall  also  appoint  a  Medical  Director, 
who  shall,  subject  to  the  approval  and  control  of  the  Manager,  appoint 
Medical  Examiners,  assign  them  to  locations,  direct  their  work  and  have 
general  supervision  of  the  medical  and  surgical  affairs  of  the  Association. 
The  Medical  Director  may,  in  the  discretion  of  the  said  Trustees,  be  the 
same  person  as  the  Manager  or  Assistant  Manager. 

TWELFTH.  Medical  Examiners  shall  make  the  required  physical 
examination  of  applicants  for  membership  in  the  Association,  prepare 
applications,  report  the  condition  of  sick  or  injured  members,  decide 


APPENDICES  371 

when  members  are  disabled,  and  when  they  are  ready  for  work,  certify 
bills  for  surgical  treatment,  perform  such  other  duties  as  may  be  required 
of  them  by  the  Medical  Director,  Manager  or  Advisory  Committee,  and 
conform  to  the  Rules  of  the  Association. 

THIRTEENTH.  No  Trustee  under  this  Deed  of  Trust  nor  any  member 
of  the  Advisory  Committee  shall  ever  receive  any  compensation  for  his 
services  as  such  Trustee  or  as  such  member  of  the  Advisory  Committee. 
This  Section  is,  however,  subject  to  the  provision  of  Section  Four  of  the 
agreement,  "Exhibit  A,"  hereto  attached. 

FOURTEENTH.  In  case  of  the  death,  resignation,  permanent  removal 
from  Cook  County,  or  inability  to  act  as  any  of  said  Trustees,  the  Board 
of  Directors  of  said  Swift  &  Company  shall  choose  a  suitable  person  to 
fill  the  vacancy,  and  any  substitute  Trustee  shall  have  the  same  power  and 
authority  and  be  subject  to  the  same  duties  and  liabilities  as  are  provided 
in  the  case  of  the  Trustees  named  in  this  Deed  of  Trust,  and  as  if 
originally  named  as  such  herein,  and  the  substitution  of  such  Trustee  shall 
be  certified  by  the  Chairman  of  the  Advisory  Committee  of  the  Trust 
Company  with  which  this  Deed  of  Trust  is  deposited,  and  shall  be  effective 
from  that  time. 

FIFTEENTH.  The  Trustees  of  the  Association  shall  have  full  power  and 
authority  over  all  funds  belonging  to  it,  and,  without  incurring  any 
personal  liability,  they  may  and  are  hereby  authorized  and  directed  to 
enter  into  an  agreement  with  said  Swift  &  Company  providing  for  the 
handling  of  all  funds  by  said  Swift  and  Company;  it  being  understood  that 
said  Swift  &  Company  shall,  in  consideration  therefor,  be  obligated  to 
pay  interest  at  such  rate  as  shall  be  determined  by  the  Trustees  hereunder 
with  the  approval  of  the  Advisory  Committee,  and  until  otherwise  fixed 
by  them  at  the  rate  of  five  per  cent,  per  annum  on  all  monthly  balances 
in  its  hands ;  provide  for  the  expenses  of  operating  the  Asosciation  and 
guarantee  the  payment  of  all  benefits,  as  provided  by  the  Rules  of  said 
Association,  a  copy  of  which  is  hereto  attached  and  marked  "Exhibit  B," 
and  made  part  hereof,  and  of  any  amendments  thereof,  certified  by  the 
Chairman  of  the  Advisory  Committee  to  the  Trust  Company  with  which 
this  Deed  of  Trust  is  deposited. 

No  Trustee  under  this  Deed  of  Trust  shall  be  liable  on  account  of  any 
funds  of  the  Association,  except  in  case  loss  is  due  to  his  own  fraudulent 
or  wilful  act  or  negligence. 

SIXTEENTH.  This  Trust  shall  continue  for  the  life  of  the  last  survivor 
of  the  parties  of  the  first  part  and  twenty-one  (21)  years  thereafter,  unless 
sooner  legally  terminated. 

SEVENTEENTH.  The  fiscal  year  of  the  Association  shall  begin  with  the 
first  day  of  January  of  each  year,  and  at  the  close  of  each  fiscal  year  the 
accounts  of  the  Association  shall  be  audited  and  the  condition  thereof 
reported  by  some  competent  person  or  persons  selected  for  that  purpose 


372  INDUSTRIAL  INSURANCE 

by  those  members  of  the  Advisory  Committee  chosen  by  the  members  of 
the  Association. 

EIGHTEENTH.  Amendments  to  the  Rules  of  the  Association  may  be 
proposed  to  the  Advisory  Committee  at  any  quarterly  meeting  by  any 
member  thereof ;  but  such  amendments  shall  not  be  acted  upon  until  a 
subsequent  meeting,  and  shall  not  be  operative  unless  adopted  by  an 
affirmative  vote  of  two-thirds  of  all  members  of  the  Committee  and  duly 
announced  by  the  Manager,  and  any  amendment  so  adopted,  approved  and 
announced  shall  be  certified  by  the  Chairman  of  the  Advisory  Committee 
and  filed  with  the  Trust  Company  with  which  this  Deed  of  Trust  is 
deposited,  and  shall  be  binding  upon  the  members  of  the  Benefit  Associa- 
tion, and  all  persons  claiming  through  or  under  them  from  the  date 
specified  in  the  announcement  thereof.  Until  amended,  as  above  provided, 
the  Rules  of  said  Association  shall  be  as  appear  in  "Exhibit  B,"  hereto 
attached. 

NINETEENTH.  The  Advisory  Committee  shall  determine  the  require- 
ments necessary  for  membership  in  the  Association,  and  until  otherwise 
provided  by  said  Committee  such  membership  shall  be  confined  to  employees 
of  said  Swift  &  Company ;  and  the  said  Advisory  Committee  may  divide 
the  members  of  the  Association  into  classes  for  the  purpose  of  determining 
contributions  and  benefits,  and  may  also  provide  for  the  transfer  of  a 
member  from  one  class  to  another,  and  may  also  fix  the  amount  of -contri- 
butions required  of  members,  the  manner  of  collection  thereof,  and  the 
amount  of  benefits  to  be  paid,  and  make  all  other  necessary  provisions  for 
the  conduct  of  the  business  of  the  Association  by  the  Manager  and  its 
other  officers. 

TWENTIETH.  The  said  parties  of  the  second  part  acknowledge  receipt 
of  contributions  by  parties  of  the  first  part  as  follows : 

Edwin  L.  Ward $1.40 

Henry   C.   Thorn 1.40 

Horace  C.   Gardner 1.40 

Charles    O.    Young 1.40 

Frank  S.  Hayward 1.40 

Charles  A.   Peacock 1.40 

Robert    C.    McManus 1.40 

Arthur   D.    White 1.40 

John    M.    Chaplin 1.40 

George    A.    Collom 1.40 

Robert  L.  Burns 50 

Thomas  J.  McAffee 1.40 

Richard  W.  Howes 1.40 

Herbert  J.  Nelson 50 

David  H.   Gifford 45 

Said  contributions,  together  with  all  other  contributions  and  receipts  of 


APPENDICES  373 

said  Association,  and  the  interest  thereon  and  increment  thereof,  are  or 
shall  be  deposited  with  said  Swift  &  Company,  in  accordance  with  the 
provisions  of  the  agreement  hereinbefore  authorized  to  be  made  by  and 
between  parties  of  the  second  part,  and  said  Swift  &  Company. 

TWENTY-FIRST.  In  case,  for  any  reason,  it  shall  be  found  desirable 
to  make  any  change  in  this  Deed  of  Trust,  or  any  addition,  supplement  or 
amendment  thereto,  same  shall  be  made  only  after  having  been  proposed 
at  a  previous  quarterly  meeting  of  the  Advisory  Committee,  and  upon  the 
affirmative  vote  of  two-thirds  of  all  members  of  said  Committee,  and,  after 
the  same  has  been  ratified  by  the  Board  of  Directors  of  the  said  Swift 
&  Company,  shall  be  certified  by  the  Chairman  of  the  Advisory  Committee 
to  the  Trust  Company  with  which  this  Deed  of  Trust  is  deposited  and 
thereafter  shall  be  as  effective  as  if  originally  part  hereof. 

TWENTY-SECOND.  In  case,  for  any  reason,  it  should  be  necessary  to 
provide  for  the  custody  of  any  of  the  funds  of  the  Association,  other  than 
with  the  said  Swift  &  Company,  then  and  in  that  event  the  said 
Trustees  may  deposit  or  invest  the  same  in  such  safe  and  reliable  manner 
and  with  such  person  or  corporation  or  in  such  investment  as  they  shall 
determine  to  be  in  the  best  interest  of  the  Association,  and  their  act  in 
the  premises  shall  be  sufficient  evidence  of  their  authority,  and  it  shall 
not  be  necessary  for  any  person  dealing  with  them  to  look  beyond  this  Deed 
of  Trust  and  the  other  papers  relating  to  the  Association  deposited  with 
the  Trust  Company  holding  this  Deed  of  Trust. 

TWENTY-THIRD.  It  is  the  intention  hereof,  and  this  Deed  of  Trust 
is  executed  on  the  express  understanding,  that  wherever  the  name  Swift 
&  Company  occurs  in  this  instrument  it  shall  also  be  held  to  include  the 
successor  or  successors  and  assign  or  assigns  of  said  Swift  &  Company, 
and  they  shall  be  substituted  for  said  Swift  &  Company,  as  occasion  may 
require,  with  like  force  and  effect,  to  all  intents  and  purposes,  as  if 
expressly  named  herein,  and  the  "Board  of  Directors"  of  said  Swift  & 
Company,  wherever  used  herein,  shall  likewise  be  held  to  include  the 
Board  of  Directors  of  the  successor  or  successors  and  assign  or  assigns  of 
said  Swift  &  Company. 

IN  WITNESS  WHEREOF,  The  parties  hereto  have  hereunto .  set  their 
hands  and  seals,  the  day  and  year  first  above  written. 

EDWIN  L.  WARD  [Seal.] 

HENRY  C.  THOM  [Seal.] 

HORACE  C.  GARDNER  [Seal.] 
CHARLES  O.  YOUNG  [Seal.]  • 
FRANK  S.  HAY  WARD  [Seal.] 
CHARLES  A.  PEACOCK  [Seal.] 
ROBERT  C.  MCMANUS  [Seal.] 
ARTHUR  D.  WHITE  [Seal.] 
JOHN  M.  CHAPLIN  [Seal.] 


374  INDUSTRIAL  INSURANCE 

GEORGE  A.   COLLOM  [Seal. 

ROBERT    L.    BURNS  [Seal. 

THOMAS  J.  MCAFFEE  [Seal. 

^RICHARD  W.   HOWES,  [Seal. 

HERBERT  J.  NELSON  [Seal. 

DAVID   H.    GIFFORD  [Seal. 

Louis  F.  SWIFT  [Seal. 

EDWARD  F.   SWIFT  [Seal. 

CHARLES  H.   SWIFT  [Seal. 

D.  EDWIN  HARTWELL  [Seal. 

EDWARD  TILDEN.  [Seal. 

AGREEMENT 

THIS  AGREEMENT,  Made  and  entered  into  by  and  between  Louis  F. 
SWIFT,  EDWARD  F.  SWIFT,  CHARLES  H.  SWIFT,  D.  EDWIN  HARTWELL,  and 
EDWARD  TILDEN,  as  Trustees  of  Swift  &  Company  Employees  Benefit 
Association,  under  a  Deed  of  Trust,  dated  July  i,  1907,  parties  of  the 
first  part,  and  SWIFT  &  COMPANY,  an  Illinois  corporation,  party  of  the 
second  part,  WITNESSETH  : 

WHEREAS,  Under  and  by  virtue  of  the  said  Deed  of  Trust,  the  said 
parties  of  the  first  part  have  been  authorized  to  enter  into  an  agreement 
with  party  of  the  second  part,  relating  to  the  funds  of  said  Association, 
a  copy  of  which  Deed  of  Trust  is  hereunto  attached,  marked  "Exhibit  A," 
and  made  part  hereof,  and, 

WHEREAS,  The  said  party  of  the  second  part  is  interested  in  further- 
ing the  purposes  of  the  said  Association,  and  is  willing  to  accept  the 
custody  of  its  funds,  as  hereinafter  provided,  and  pay  interest  thereon  and 
provide  for  its  expenses  and  guarantee  payment  of  its  benefits. 

Now,  THEREFORE,  In  consideration  of  the  premises,  the  said  parties 
agree  and  bind  themselves  as  follows : 

1.  Said  parties  of  the  first  part  hereby  authorize  and  request  party  of 
the  second  part  to  deduct  from  its  pay-rolls  out  of  wages  due  its  employees 
who  are  members  of  said  Association,  the  amounts,  from  time  to  time,  due 
from  said  members   for  the  purpose   of  making  contributions   required   to 
be  made  by  them  under  the  Rules  of  said  Association,   and  the  amounts 
so  collected  shall  be  held  by  party  of  the  second  part  under  the  provisions 
of  this  agreement. 

2.  Party  of  the  second  part  agrees  to  pay  out  of  such  funds  all  benefits 
required  to  be  paid  by  said  Association,  upon  order  of  the  said  Trustees  or 
the  Manager  of  said  Association. 

3.  Party  of  the  second  part  also  agrees  to  allow  interest  at  such  rate 
as  shall  be  determined  by  the  parties  of  the  first  part,  with  the  approval 
of    the    Advisory    Committee,    and   until    otherwise    fixed    by    them    at    the 
rate  of  five  per  cent,  per  annum  on  all  monthly  balances  of  said  Associa- 
tion and   also   to  provide  for  the  operating  expenses  of  said  Association, 


APPENDICES 


375 


and    hereby    agrees    to    make    good    any    deficiency    in    the    funds    of    said 
Association  to  meet  its  obligations  to  members. 

4.  Party  of  the  second  part  agrees  to  continue  the  pay  or  wages  or 
to  reimburse  all  members  of  the  Advisory  Committee,  for  their  time  while 
engaged  on  business  of  the  Association,  or  traveling  to  or  from  meetings 
of  the  Advisory  Committee  of  the  Association,  and  their  expenses  during 
such  time  shall  be  included  in  the  operating  expenses  of  the  Association, 
which  the  party  of  the  second  part  agrees  herein  to  assume  and  pay. 

THIS  AGREEMENT  shall  extend  to  and  be  binding  upon  the  successors 
and  assigns  of  the  respective  parties. 

WITNESS  the  hands  of  said  parties  of  the  first  part  and  the  said  party 
of  the  second  part,  by  its  duly  authorized  President,  attested  by  its  Secre- 
tary and  corporate  seal,  the  first  day  of  July,  A.  D.  1907. 

Louis  F.  SWIFT 
EDWARD  F.  SWIFT 

Seal  of  I  CHARLES  H.  SWIFT 

Swift  &  Company  \  D.  EDWIN  HARTWELL 

EDWARD  TILDEN 
SWIFT  &  COMPANY 

Attest .  By  Louis  F.  SWIFT,  President 

D.  E.  HARTWELL,  Secretary. 

SWIFT  &  COMPANY  EMPLOYEES  BENEFIT  ASSOCIATION 
SCHEDULE  OF  CONTRIBUTIONS  FOR  MEMBERS  UNDER  45  YEARS  OF  AGE 
Members  45  years  of  age  and  over  may  enter  on  this  schedule  if  they  have  been 
in  the  employ  of  Swift  &  Company  continuously  from  December  3ist, 
1906,  to  date  of  entry  and  avail  themselves  of  this  privilege  on  or  before 
December  31,  1907 


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3,200.00 

376  INDUSTRIAL  INSURANCE 

Additional  death  benefits  (as  allowed  by  rules),  five  cents  per  week  for 
each  $200. 

Members  who  have  left  the  service  and  contribute  for  death  benefit  only, 
5  cents  per  week  for  each  $200. 

Weekly  accident  benefit  for  104  weeks  and  reasonable  bill  for  surgical 
attention. 

Weekly  sick  benefit  after  the  first  six  (6)  working  days  for  52  weeks  and 
half -weekly  benefit  for  additional  52  weeks. 

SCHEDULE  OF  CONTRIBUTIONS  FOR  MEMBERS  45  YEARS  OF  AGE 

AND  OVER  AS  FOLLOWS: 

Members  joining  between  the  ages  of  45  and  50  years — one  and  one-half 
times  above  contributions. 

Members  joining  between  the  ages  of  50  and  55  years — one  and  four- 
fifths  times  above  contributions. 

Members  joining  between  the  ages  of  55  and  60  years — two  and  three 
tenths  times  above  contributions. 


APPENDIX  H 

EMPLOYEES'   BENEFIT  ASSOCIATION,   INTERNATIONAL 
HARVESTER  COMPANY 

OBJECT 

1.  The  object  of  the  Benefit  Association  is  to  provide  its  members 
with  a  certain  income  when  sick,  or  when  disabled  by  accident,  either 
on  or  off  duty,  and  to  pay  to  their  families  certain  definite  sums  in 
case  of  death;  to  create  and  maintain  a  fund  which  shall  belong  to 
the  employees,  be  used  in  payment  of  benefits  to  them,  and  cost  them 
the  least  money  possible  considering  the  benefits  received. 

ORGANIZATION 

2.  International     Harvester     Company,     International     Harvester 
Company    of    America,    and    subsidiary    companies,    have    associated 
themselves  with  such  of  their  employees  as  may  join  the  same  in  the 
formation  of  this  Benefit  Association. 

3.  The  Benefit  Association  is  in  the  executive  charge  of  a  Board 
of  Trustees  consisting  of  members  representing  the  plants  and  depart- 
ments   of    the    International    Harvester    Company,    the    International 
Harvester   Company   of   America,    and   subsidiary   companies,    and   a 
Superintendent. 

The   headquarters    of   the    Superintendent   will   be   at   the   general 
office  of  the  Company  in  Chicago. 

4.  In  these  regulations,  unless  otherwise  qualified,  the  titles  "Com- 
pany," "President,"  "General  Manager"  and  "Board  of  Directors"  will 
be  understood  as  meaning  the  International  Harvester  Company,  the 
President,  General  Manager,  and  the  Board  of  Directors  of  that  Com- 
pany.    The  titles,   or  terms,   "Board  of   Trustees,"   "Superintendent," 
and   "Medical   Examiner,"  will  be   understood   as  meaning   Board  of 
Trustees,   Superintendent,   and   Medical   Examiner  of   the   Employees' 
Benefit  Association.     The  term  "Fund"  will  be  understood  as  apply- 
ing to  the  Employees'  Benefit  Association. 

5.  The  Benefit  Fund  will  consist  of  contributions   from  members 
of  the  association,  income  or  profit  from  investments,  gifts  or  legacies 
to  the  Fund,  and  such  contributions  as  may  be  made  by  the  Company 
from  time  to  time. 

377 


378  INDUSTRIAL  INSURANCE 

COMPANY'S  CONTRIBUTION 

6.  At  the   end  of   each  year,   if   the   average  membership   in  the 
Benefit  Association  during  that  year  has  equalled  50  per  cent,  of  the 
average  total  number  of  employees  in  the  companies'  manufacturing 
plants,  the  company  will  contribute  $25,000  to  the  fund,  and  if  such 
average  membership  has  equalled  75  per  cent,  of  such  total  number 
of    employees,    the    Company    will    contribute    $50,000    to    the    fund. 
The   Company  agrees  to  temporarily   advance   funds  when  necessary 
for  payment  of  benefits  at  due  rate;  to  guarantee  the  safety  of  the 
fund  and  to  pay  semi-annual  interest  on  the  average  balances  at  four 
per  cent. 

HANDLING    OF    FUND 

7.  The   contributions   from   members   shall  be   used   only   for   the 
payment   of   benefits    due    to    members    of    the    Association,    and    the 
expenses   of   administration.     If   a   surplus   shall   accumulate   it   shall 
remain  under  the  control  of  the  members  of  the  Association,  through 
their  representatives  on  the  Board  of  Trustees,  and  if  a  deficit  arise 
the  Company  will  make  temporary  advances  to  pay  same. 

BOARD    OF    TRUSTEES 

8.  There  shall  be  a  Board  of  Trustees  of  thirty  members  to  be 
chosen  annually  in  December,  to   serve   for  one  year   from  the  first 
day  of  January  next  succeeding,  and  until  their  successors  shall  take 
office,  as  follows : 

One  half  shall  be  chosen  by  the  employees  who  are  members  of 
the  Association;  one  representative  to  be  chosen  by  employees  from 
each  Works,  including  the  Works  of  subsidiary  and  affiliated  com- 
panies and  the  field  force  of  the  Sales  and  Collection  Departments  of 
the  International  Harvester  Company  of  America. 

An  equal  number  shall  be  chosen  by  the  Board  of  Directors  of 
the  Company. 

The  President  shall  be  ex  officio  a  member  and  chairman  of  the 
Board  of  Trustees,  and  entitled  to  vote.  He  shall  have  the  power  to 
appoint  a  temporary  chairman  to  serve  in  his  absence. 

The  number  of  Trustees  may  be  increased  or  decreased  after  the 
first  year  by  a  majority  vote  of  the  Trustees,  but  at  all  times  one-half 
shall  be  elected  by  the  employees  and  one-half  appointed  by  the 
Company. 

a)  Quorum. — A  majority  of  the  Board  of  Trustees  shall  consti- 
tute a  quorum  for  the  transaction  of  business. 


APPENDICES  379 

b)  Election. — The  members  of  the  Board  of  Trustees  chosen  by 
the  members  of  the  Benefit  Association  shall  be  elected  by  ballot,  from 
the  respective  Works  or  Operating  Departments,  on  the  first  Monday 
in    December.      Each    member    of    the    Benefit    Association    shall    be 
entitled  to  cast  one  vote,  and  the  votes  shall  be  taken  and  certified 
under  oath  by  tellers  selected  by  the  Trustees. 

c)  Trustees  for  First  Quarter. — The  first  Board  of  Trustees  to 
serve   to   January    i,    1909,   shall   be   appointed   by   the    President   or 
General  Manager. 

d)  Termination   of  Membership. — In  the  event  of  termination  of 
service  of  any  member  of  the  Board  of  Trustees,  his  membership  in 
the  Board  shall  thereupon  terminate. 

e)  Vacancies. — Any  vacancy  among  the  members  of  the  Board  of 
Trustees  elected  by  the  employees  shall  be  filled  by  special  election  at 
the  same  Works  or  Operating  Department. 

Any  vacancy  among  the  members  chosen  by  the  Board  of  Direc- 
tors shall  be  filled  by  appointment  of  the  President  or  General 
Manager. 

/)  Secretary. — The  Superintendent  of  the  Association  shall  be 
Secretary  of  the  Board.  He  shall  have  no  vote. 

g}  Duties  of  Board  of  Trustees. — The  Board  of  Trustees  shall 
appoint  and  have  general  supervision  over  the  Superintendent,  and  of 
the  operations  of  the  Association,  and  see  that  they  are  conducted  in 
accordance  with  its  regulations. 

h)  Meetings. — The  Trustees  shall  hold  stated  meetings,  quarterly, 
on  the  second  Thursdays  of  January,  April,  July,  and  October,  at  the 
general  office  of  the  Company,  Chicago,  and  shall  meet  at  other  times 
at  the  call  of  the  Chairman. 

i)  Special  Meetings. — It  shall  be  the  duty  of  the  Chairman  to  call 
special  meetings  of  the  Trustees  upon  the  written  request  of  seven  of 
its  members. 

/)  Traveling  Expenses. — The  necessary  traveling  expenses  of 
Trustees,  actually  incurred,  and  pay  or  wages  of  such  members  for 
the  time  engaged  in  traveling  to  or  from  meetings  of  the  Board  and 
attending  same,  shall  be  paid  by  the  Company. 

ANNUAL   REPORTS 

9.  The  fiscal  year  of  the  Association  shall  begin  with  the  first  day 
of  January  of  each  year. 


380  INDUSTRIAL  INSURANCE 

The  first  fiscal  year  shall  be  from  September  i,  1908,  to  January  i, 
1910. 

The  condition  of  the  Fund  at  the  close  of  each  year  shall  be 
audited  and  reported  on  by  a  competent  person  or  persons  selected  for 
that  purpose  by  the  Trustees  elected  by  the  members  of  the  Association. 

A  detailed  report,  including  all  receipts  and  disbursements,  shall 
be  printed  annually,  and  members  may  procure  copies  on  application. 

The  books  shall  be  open  at  all  times  to  members. 

SUPERINTENDENT 

10.  The  Superintendent  of  the  Benefit  Association  shall  be  appointed 
by  the  Trustees. 

Under  the  direction  of  the  Board,  he  shall  have  charge  of  all 
business  of  the  Association;  employ  necessary  clerks  and  other  assis- 
tants; prescribe  the  forms  and  blanks  to  be  used;  certify  all  bills  and 
pay-rolls;  sign  all  orders  for  payments  of  benefits,  furnish  to  the 
Board  such  reports  as  they  may  require,  and  decide  all  questions 
properly  referred  to  him. 

He  shall  have  authority  to  appoint  physicians,  medical  examiners, 
and  visiting  nurses,  and  shall  have  general  supervision  of  all  medical 
and  surgical  affairs  of  the  Association. 

MEDICAL    EXAMINERS 

11.  The    medical    examiners     shall    make    the    required    physical 
examination  of  applicants  for  membership  in  the  Benefit  Association, 
prepare  applications,  report  the  condition  of  sick  or  injured  members, 
decide  when  members  are  disabled  and  when  they  are  able  to  work, 
whether  any  disability  shall  be  considered  a  relapse  or  original  disa- 
bility and  whether  cause  of  disability  shall  be  classed  as  due  to  sick- 
ness or  accident,  certify  bills  for  surgical  and  hospital  treatment,  and 
perform  such  other  duties  as  may  be  required  of  them  by  the  Superin- 
tendent.    The  medical  examiner  and  physician  may  be  one   and  the 
same  person. 

MEMBERSHIP 

12.  All  employees  of  the  International  Harvester  Company,  Inter- 
national  Harvester    Company   of   America,   and   subsidiary   companies 
who  apply  for  membership  and  conform  to  the  regulations,  shall  be 
members  of  the  Association. 

13.  Eligibility. — (a)  Any   employee   in   service   on   or  before    Sep- 


APPENDICES  381 

tember  20,  1908,  may  become  a  member  of  the  Association  without 
medical  examination  and  without  age  limit  at  any  time  prior  to 
January  i,  1909. 

b)  Thereafter,  any  employee  not  over  forty-five  years  of  age  may, 
upon  passing  a  satisfactory  medical  examination,  and  upon  approval 
of  his  application  by  the  Superintendent,  became  a  member. 

c)  Further,  any  employee  who  enters  the  service  after  September 
20,  1908,  and  is  over  forty-five  years  of  age,  may,  upon  passing  a 
satisfactory  medical  examination,  and  upon  approval  of  his  applica- 
tion by  the  Superintendent,  become  a  member  under  the  same  regula- 
tions, except  that  the  death  benefit  in  such  case  shall  be  only  $100. 

14.  Temporary  Lay-off. — Any  member  who  is  temporarily  relieved 
from  service  for  a  period  not  exceeding  ninety  days  may  retain  his 
membership    during   such    absence    by   paying   his    contributions    each 
month  in  advance,  the  amount  of  contributions  during  such  absence  to 
be  based  upon  previous  two  months"  average  contributions. 

15.  Leaving  Service. — When  a   member   resigns    from  the   service 
or    leaves    the    service    without    notice,    or    absents    himself    without 
notice   (unless  he  afterwards  gives  reasons  satisfactory  to  the  Super- 
intendent), or  is  discharged,  or  is  laid  off  for  a  period  longer  than 
ninety  days, — his  membership  in  the  Association  shall  terminate  with 
his  employment,  and  he  shall  not  thereafter  be  entitled  to  any  bene- 
fits except  for  disability  beginning  and  reported  before  such  termina- 
tion of  employment  and  continuing  without  interruption. 

Any  employee  leaving  the  service,  who  has  been  a  member  of  the 
Benefit  Association  for  one  year,  may  continue  his  membership  in 
respect  only  of  the  minimum  death  benefit  which  he  has  held  during 
the  last  year  of  employment,  or  of  any  smaller  amount,  upon  making 
supplementary  application  therefor  before  termination  of  employment 
or  within  five  days  thereafter. 

16.  Reinstatements. — Any   member   paying    full    contributions    dur- 
ing temporary  leave  of  absence  may  be  reinstated  within  ninety  days 
without  physical  examination. 

If  any  member  contributing  for  death  benefits  only  is  re-employed, 
he  shall  resume  full  membership  upon  passing  a  satisfactory  physical 
examination. 

APPLICATIONS 

17.  Membership  in  the  Benefit  Association  shall  be  based  upon  an 
application  in  the  following  form: 


382  INDUSTRIAL  INSURANCE 

APPLICATION    FOR    MEMBERSHIP    IN    EMPLOYEES'     BENEFIT 

ASSOCIATION  OF  INTERNATIONAL  HARVESTER 

COMPANY 

No 

Dept.  or 

Works   

To  the  Superintendent  of  Employees'  Benefit  Association  of  International 
Harvester  Company : 

I    , 

being years  of  age,   and  residing  at  No 

Street,  in  the  City  of, 

in  the  County  of ,  and  State  of 

now  employed  by 

do  hereby  apply  for  membership  in  said  Employees'  Benefit  Association, 
and  agree  to  be  bound  by  the  regulations  of  said  Association,  a  copy  of 
which  has  been  by  me  received,  and  by  any  other  regulations  of  said 
Benefit  Association  hereafter  adopted  and  in  force  during  my  membership. 

I  also  agree,  request  and  direct  that  said  Company,  by  its  proper 
agents,  and  in  the  manner  provided  for  in  such  rules,  shall,  during  the 
continuance  of  my  employment,  apply  as  a  voluntary  contribution  from 
any  wages  earned  by  me  under  said  employment  two  (2)  per  cent,  of  my 
wages  for  the  purpose  of  securing  the  benefits  provided  in  the  regulations 
for  a  member  of  said  Association. 

Unless  I  shall  hereafter  otherwise  designate  in  writing,  with  the 
approval  of  the  Superintendent  of  the  Benefit  Association,  death  benefits 
shall  be  payable  to  my  wife  (husband),  if  I  am  married  at  the  time  of 
my  death ;  or,  if  I  have  no  wife  (husband)  living,  then  to  my  children, 
collectively,  each  to  be  entitled  to  an  equal  share,  including  as  entitled 
to  the  parent's  share  the  children  of  any  dead  child ;  or  if  there  be  no 

children  or  children's  children  living,  then  to 

if  living,  and  if  not  living,  to  my  father  and  mother  jointly,  or  the  survivor; 
or  if  neither  be  living,  then  to  my  next  of  kin,  payment  in  behalf  of  such 
next  of  kin  to  be  made  to  my  legal  representative ;  or,  if  there  be  no  such 
next  kin,  or  if  proper  claim  is  not  made  to  the  Superintendent  within  one 
year  from  the  date  of  my  death,  the  death  benefit  shall  lapse,  and  the 
amount  thereof  shall  become  and  remain  a  part  of  the  Benefit  Fund. 

I  also  agree,  for  myself  and  those  claiming  through  me,  to  be  gov- 
erned by  the  regulations  providing  for  final  and  conclusive  settlement  of 
all  claims  for  benefits  or  controversies  of  whatever  nature,  by  reference 
to  the  Superintendent  of  the  Benefit  Association,  and  an  appeal  from  his 
decision  to  the  Board  of  Trustees. 

I  also  agree  that  any  untrue  or  fraudulent  statement  made  by  me  to 


APPENDICES  383 

the  Medical  Examiner,  or  any  concealment  of  facts  in  this  application,  or 
any  attempt  on  my  part  to  defraud  or  impose  upon  said  Benefit  Associa- 
tion, or  my  resigning  from  or  leaving  the  service  of  said  International 
Harvester  Company,  International  Harvester  Company  of  America,  or 
subsidiary  company,  or  my  being  relieved  or  discharged  therefrom,  shall 
forfeit  my  membership  in  the  said  Benefit  Association,  and  all  rights,  bene- 
fits and  equities  arising  therefrom,  except  that  such  termination  of  my 
employment  shall  not  (in  the  absence  of  any  of  the  other  foregoing  causes 
of  forfeiture)  deprive  me  of  any  benefits  to  the  payment  of  which  I  may 
be  entitled  by  reason  of  disability  beginning  and  reported  before  and  con- 
tinuing without  interruption  to  and  after  such  termination  of  my  employ- 
ment, nor  of  the  right  to  continue  my  membership  in  respect  of  death 
benefit  only,  as  provided  in  said  rules. 

I  certify  that  I  am  correct  and  temperate  in  my  habits ;  that,  so  far 
as  I  know,  I  am  now  in  good  health,  and  have  no  injury  or  disease,  consti- 
tutional or  otherwise,  except  as  shown  in  the  accompanying  statement  made 
by  me  to  the  Medical  Examiner,  which  statement  shall  constitute  a  part 
of  this  application. 

» In  witness  whereof  I  have  signed  my  name  hereto  at 

,  in  the  County  of , 

State  of ,  this day  of 

A.  D.  190. .;  this  application  to  take  effect  on  such  date  as  may  be  designated 
by  said  Superintendent. 

Signature   of  Applicant. 
Witness :     

The  foregoing  application  is  approved  at  the  office  of  the  Superin- 
tendent of  the  Employees'  Benefit  Association,  International  Harvester  Co., 

at  Chicago,  Illinois,  this day  of 

A.  D.  190. .;  to  take  effect  the day  of 

A.  D.  190. . 

Superintendent  of  Employees'  Benefit  Association. 

Applications  shall  take  effect  on  the  date  when  approved  by  the 
Superintendent,  and  a  Certificate  of  Membership  shall  be  issued. 

NOTE. — For  employees  who  are  not  required  to  pass  a  medical 
examination  upon  application,  part  of  clause  A  and  part  of  clause  B 
referring  to  medical  examination  will  be  waived. 

18.  Physical  Defects. — If  any  applicant  for  membership  has  physi- 
cal defects  which  would  prevent  the  approval  of  his  application  if 
presented  unconditionally,  his  application  may  nevertheless  be 
approved;  provided  that  he  executes  an  agreement  in  writing,  satis- 
actory  to  the  Superintendent,  to  the  effect  that  he  shall  not  be  entitled 


384  INDUSTRIAL  INSURANCE 

under  his  membership  to  any  benefits  for  disability  caused  by,  arising 
from,  or  growing  out  of  such  defects;  such  agreement  to  be  attached 
to  and  to  be  made  a  part  of  his  said  application,  and  such  modification 
of  the  prescribed  forms  of  application  is  hereby  authorized. 

CONTRIBUTIONS 

19.  The  word   "Contribution"  wherever  used  in  these   rules   shall 
be  held  and  construed  to  mean  such  designated  portion  of  the  wages 
payable  by  the  Company  to  an  employee  as  he  shall  have  agreed  in 
his  application  that  the  Company  shall  apply  for  the  purpose  of  secur- 
ing to  him  the  benefits  of  the  Benefit  Association,  or  such  cash  pay- 
ments as  it  may  be  necessary  for  a  member  to  make  for  said  purpose. 

20.  Contributions  from  Wages — Due  Dates. — Contributions  for  any 
month  will  be  due  on  the  1st  and  the  I5th  of  that  month,  and  will 
ordinarily  be  deducted  from  the  member's  wages  due  on  these  dates,  or 
on  regular  pay-days  at  each  Works. 

The  contributions  shall  be  2  per  cent,  of  the  wages  received  by 
the  employee. 

If  any  member's  contribution  is  omitted  from  the  pay-roll  in 
error,  the  fact  that  such  deduction  has  not  been  made  shall  not  debar 
him  or  his  beneficiary  from  benefits  to  which  they  would  otherwise  be 
entitled,  and  contribution  shall  be  deducted  from  next  pay-roll. 

21.  Cash    Payment    of    Contributions. — When    a    member    has    no 
wages  on  the  pay-roll,  any  contributions  due  from  him  must  be  paid 
in  cash,  in  advance,  to  the   Superintendent,  otherwise  he   will  be  in 
arrears. 

A  member  contributing  for  death  benefits  only  shall  make  such 
cash  payments  direct  to  the  Superintendent. 

22.  Amount   of   Contribution   for   Death   Benefit    Only. — Members 
who  have  left  the  service  of  the  Company  and  retain  their  member- 
ship for  death  benefits  as  herein  provided,  shall  contribute  ten  cents 
per  month,  in  advance,  for  each  one  hundred  dollars  of  death  benefit, 
on  the  basis  of  last  year's  salary,  but  not  more  than  $2,000. 

23.  Contributions    During    Disability. — Members     shall    not    make 
contributions    for   any   time   when   declared   disabled   by   the   Medical 
Examiner,  except  as  provided  in  the  regulations.     When  full  wages 
are  paid  the  usual  contribution  shall  be  made. 

24.  Arrears. — When  a  member  is  in  arrears  he  shall  be  entitled  to 
no  benefits,  and  if  in  arrears  two  months  his   right  to  reinstatement 
without  physical  examination  shall  cease  without  notice. 

25.  Maximum    Benefits. — -No    member    shall    be    allowed    to    con- 


APPENDICES  385 

tribute  or  receive  benefits  on  the  basis  of  more  than  $2,000  annual 
compensation,  but  if  his  salary  exceeds  said  amount,  his  contribu- 
tions and  benefits  shall  be  calculated  on  said  sum. 

BENEFITS 

26.  The    following    benefits    shall    be    paid    to    members    or    bene- 
ficiaries   entitled   thereto,    in    accordance   with   the    provisions    of   the 
regulations  : 

27.  Sickness  Benefit. —  (a)   Payment  for  each  day,   except  for  the 
first  seven  days  of  disability  classed  as  due  to  sickness,  for  a  period 
not   longer   than    fifty-two    weeks,    at   one-half    of   member's    average 
wage,  on  basis  of  last  sixty  days.     A  relapse  shall  be  considered  part 
of  the  disability  in  computing  term  of  disability. 

b)  Establishing  Claims  for  Sickness  Benefit. — To  establish  a 
claim  for  sickness  benefits  there  must  be  positive  evidence  of  acute 
or  constitutional  disease  sufficient  to  cause  disability. 

c}  Causes  of  Disability  which  Shall  Be  Classed  as  Due  to  Sickness. 
— Disability  resulting  from  infection  of  a  cut,  abrasion,  scratch, 
puncture,  or  other  wound,  or  from  any  injury,  not  immediately  dis- 
abling, and  not  reported  at  the  time  of  the  occurrence  of  the  acci- 
dent causing  the  injury,  or  from  poison,  however  taken  into  or  acting 
upon  the  body,  or  from  any  overdose  of  medicine  or  drug  taken  by 
mistake,  or  from  surgical  operation  necessary  for  the  removal  of 
some  defect  which  would  otherwise  probably  produce  disability,  or 
from  sunstroke,  or  frostbite,  shall  be  classed  as  due  to  sickness. 

28.  Accident  Benefits. —  (a)   Payment  for  each  day  or  part  of  day 
of  disability  classed  as  due  to  accident   (either  when  at  work  or  off 
duty),   for  a  period  of  not  longer  than   fifty-two  weeks,  at  one-half 
of  member's  average  pay,  on  basis  of  last  sixty  days'  wages. 

b)  Establishing  Claims  for  Accident  Benefits. — To  establish  a 
claim  for  accident  benefits  the  accident  must  be  reported  immediately 
upon  its  occurrence,  and  there  must  be  external,  positive  and  visible 
evidence  of  physical  injury  by  accident  sufficient  to  cause  immediate 
disability.  In  cases  of  alleged  sprain,  strain,  wrench,  and  the  like, 
where  physical  proof  of  disabling  injury  is  lacking,  the  member  must 
furnish  substantial  history,  satisfactory  to  the  Superintendent,  of  vio- 
lence accidentally  inflicted  sufficient  and  liable  to  cause  disabling 
injury,  otherwise  accident  benefits  will  not  be  allowed. 

29.  Benefits  after   Termination   of  Service. — A  member   entited  to 
benefits  for  time  after  termination  of  service  shall  not  be  entitled  to 
benefits  on  account  of  sickness  beginning  or  injury  occurring  during 


386  INDUSTRIAL  INSURANCE 

A 
such  time,   nor  on  account   of   death   occurring  in  such  time,  unless 

directly  due  to  the  sickness  and  injury  and  occurring  during  the  dis- 
ability existing  at  the  time  of  such  termination  of  service,  or  unless 
he  continues  his  membership  in  respect  to  death  benefit  only,  in 
accordance  with  the  foregoing. 

SPECIAL   BENEFITS    IN    CASE   OF    SERIOUS    ACCIDENT 

30.  Feet    and    Hands. — If    a    member    receives    accidental    injuries 
producing  the  immediate  severing  of,  or  necessitating,  in  the  opinion 
of  a  Medical  Examiner  of  the  Association,  the  amputation  of  a  hand 
or  foot  at  or  above  the  wrist  or  ankle,  he  shall  receive  a  total  amount 
equal  to  one  year's  average  wages. 

In  case  of  loss  of  both  hands  or  both  feet,  or  of  one  hand  and 
one  foot,  he  shall  receive  twice  the  above  benefits,  or  a  total  amount 
equivalent  to  two  years'  average  "wages. 

31.  Eyes. — If   a   member    receives   accidental    injuries    resulting   in 
the  total  and  irrecoverable  loss  of  sight  of  one  eye,  he  shall  receive 
a  total  amount  equal  to  one-half  his  average  yearly  wage. 

For  the  total  and  irrecoverable  loss  of  the  sight  of  both  eyes,  he 
shall  receive  the  total  amount  of  two  years'  average  wages. 

32.  Lump   Settlements. — In   case   of   any   grave   injury   or   chronic 
sickness  where  the  member  desires  to  accept  a  lump  sum  in  lieu  of 
the  benefits  which  might  become  due  to  him  or  on  his  account,  and 
in  full  of  all  obligations  of  the  Benefit  Association  arising  from  his 
membership,  the  Superintendent  shall  have  authority  to  make  full  and 
final  settlement  with  such  member  on  such  terms  as  may  be  agreed 
upon  in  writing.    All  such  settlements  shall  be  reported  to  the  Trustees 
at  its  next  meeting. 

33.  Limitations. — No  member  shall  be  entitled  to  disability  benefits 
from  the  Association  and  a  pension  from  the  Company  at  the  same 
time,  but   he   may  retain  his   membership   for   death   benefit   without 
regard  to  pension. 

No  member  shall  be  entitled  to  receive  benefits  from  sickness  and 
accident  disability  at  the  same  time. 

34.  Relapse. — In   case    of    relapse   in   sickness    disability   occurring 
within  two  weeks,  or  a  succession  of  sickness  disability  upon  an  acci- 
dent, which  lasted  one  week  or  more,  the  first  seven  days  shall  not  be 
deducted  in  computing  time  of  sick  benefits ;  and  where  such  immedi- 
ately preceding  accident  disability  lasted  six  days   or  less,  the  num- 
ber of  days  to  be  deducted  shall  be  seven,  less  the  number  of  days  of 
such  accident  disability. 


APPENDICES  387 

35.  Payments. — Benefits  on  account  of  continued  disability  will  be 
paid  semi-monthly. 

Benefits  for  short  periods  of  disability  will  be  paid  as  soon  as  the 
amount  due  can  be  determined. 

Benefits  shall  be  paid  only  to  the  disabled  member,  or  in  accord- 
ance with  his  written  order  when  approved  by  the  Superintendent,  or 
to  his  legal  representative. 

Benefits  shall  be  paid  in  conformity  with  the  financial  methods  of 
the  Company  on  orders  drawn  by  the  Superintendent,  upon  his  receiv- 
ing such  documents  respecting  claims  as  may  be  required  by  him. 

DEATH    BENEFITS 

36.  Death  from  Sickness. — Payment,   in  case  of   death  classed  as 
due  to  sickness,  of  an  amount  equal  to  one  year's  average  wages. 

37.  Death  from  Accident. — Payment,  in  case  of  death  classed  as 
due  to  accident,  of  an  amount  equivalent  to  two  years'  average  wages. 

38.  Establishing    Claims    for    Death    Benefits. — Claims    for    death 
benefits  must  be  made  within  sixty  days  after  the  death  of  the  mem- 
ber.    To  establish  a  claim   for  accident  death  benefit  there  must  be 
external,  positive,  and  visible  evidence  of  physical  injury  by  accident 
sufficient  to  cause  death;  death  due  to  other  causes  shall  be  classed 
as  due  to  sickness. 

39.  Payment  of  Death  Benefits. — Death  benefits,  together  with  any 
unpaid    disability   benefit,    shall    be   payable    to    the    beneficiary   of    a 
deceased  member  upon  proof  of  claim. 

A  part  of  the  death  benefit  (not  to  exceed  one  hundred  dollars) 
may,  at  the  discretion  of  the  Superintendent,  be  paid  before  final 
settlement,  to  meet  funeral  or  other  urgent  expenses  incident  to  the 
death  of  a  member. 

40.  Suicide. — If  a  member  commits  suicide  before  the  end  of  the 
first  year  of  his  membership  the  beneficiary  shall  receive  in  full  satis- 
faction of  all  claims  only  such  amount  as  the  member  has  contributed 
for  death  benefits. 

DISABILITY 

41.  Wherever  the  word  "Disability"  is  used  in  these  regulations, 
it  shall  be  held  to  mean  physical  inability  to  work,  by  reason  of  sick- 
ness or  accidental  injury,  and  the  word  "Disabled"  shall  apply  to  mem- 
bers thus  physicaly  unable  to  work. 

42.  The  Decision  as  to  when  members  are  disabled  and  when  they 
are  able  to  work  shall  rest  with  the  Medical  Examiner  of  the  Asso- 


388  INDUSTRIAL  INSURANCE 

ciation,  and  his  decision  shall  be  final  and  binding  upon  the  member, 
subject  to  the  provisions  of  the  regulations. 

43.  Notification. — When    a   Works    member   becomes    disabled,    he 
shall  notify  his  timekeeper  immediately  or  cause  him  to  be  notified; 
other  employees  shall  notify  their  superior  officers.     In  reporting  dis- 
ability, the  member  shall  give  his  house  address.     If  he  fails  to  give 
notice  until  he  recovers,  he  shall  not  be  entitled  to  benefits  unless  he 
proves    his    disability   to   the   satisfaction   of    the    Superintendent   and 
gives  satisfactory  reason  for  failure  to  give  notice.     If  he  gives  notice 
during  disability,  but  delays  in  so  doing,  he  shall  not  be  considered 
disabled  before  the  day  on  which  notice  is  given,  unless   he  proves 
his  disability  before  that  day  to  the  satisfaction  of  the   Superintend- 
ent and  gives  satisfactory  reason  for  delay  in  giving  notice. 

If  a  member  becomes  disabled  when  away  from  home,  whether  on 
business  for  his  employer  or  on  leave  of  absence,  he  shall  not  be 
entitled  to  benefits  unless  he  reports  his  disability  immediately  and 
proves  it  to  the  satisfaction  of  the  Superintendent. 

44.  Reports. — When    a    member    becomes    disabled,    he    shall    also, 
unless  unable  on  account  of  his  disability,  report  immediately  to  the 
Medical  Examiner,  at  his  office,  during  business   hours.     A  disabled 
member  not  confined  to  the  house  by  his  disability  shall  also  report 
at  the  Medical  Examiner's  office  from  time  to  time  as  requested,  and 
keep  any  other  appointments  made  by  the  Examiner.     Members  who 
avoid  the  Medical  Examiner  or  neglect  to  report  or  keep  appointments 
shall  not  be  entitled  to  benefits. 

If  a  member  who  has  been  reported  as  able  to  work  by  the 
Medical  Examiner  is  not  able  to  work  on  the  day  set,  he  shall  immedi- 
ately notify  his  timekeeper,  and  the  Medical  Examiner,  and  report  to 
the  latter  in  person  if  possible;  otherwise  he  shall  not  be  considered 
disabled  after  the  day  set  for  his  return  to  work. 

45.  Absence. — When  a  disabled  member  wishes  to  leave  home,  he 
shall  obtain  from  the  Medical  Examiner  written  approval  of  absence 
for  a  specific  time,  shall  furnish  him  satisfactory  proof  of  disability, 
while  absent,  and  report  immediately  to  him  on  his  return,  otherwise 
he  shall  not  receive  benefits  while  absent. 

46.  No   Benefits    When   Disability   Is   Due   to   Intoxication,   etc.— 
Benefits    shall    not    be    payable    for    disability    directly,    indirectly    or 
partly  due  to  intoxication,  or  the  use  of  alcoholic  liquors  as  a  bever- 
age, or  to  immoderate  use  of  stimulants  or  narcotics,  or  to  unlawful 
acts  or  immoralities,  or  to  venereal  diseases,  however  contracted,  or 


APPENDICES  389 

to  the  results  thereof,  or  to  urethritis,  orchitis,  epididymitis,  stricture, 
or  glandular  swelling  or  abscess  in  the  groin,  however  caused,  or  to 
fighting,  unless  in  self-defense  against  unprovoked  assault,  ot  to  other 
encounter,  such  as  wrestling,  scuffling,  fooling,  and  the  like,  or  to 
injury  received  in  any  brawl,  or  in  any  liquor  saloon,  gambling  house 
or  other  disreputable  resort. 

During  any  such  disability  coming  under  this  rule  a  member  may 
contribute  for  and  be  entitled  to  DEATH  BENEFITS  ONLY. 

EXAMINATION 

47.  Members   shall   not  be  entitled  to  benefits   if  they   decline  to 
permit  the  Medical  Examiner  to  make  or  have  made  by  any  other 
physician   such   examination   as   he  may  deem  necessary  to   ascertain 
their  condition  when  claiming  disability. 

Disabled  members  must  take  proper  care  of  themselves  and  have 
proper  treatment.  Benefits  will  be  discontinued  to  members  who 
refuse  or  neglect  to  follow  the  recommendations  of  the  Medical 
Examiner. 

CONTROVERSY 

48.  Evidence. — In  any  controversy,   claim,  demand,   suit-at-law,  or 
other  proceeding  between  any  member,  his  beneficiary  or  legal  repre- 
sentative, and  the  Benefit  Association,  the  certificate  of  the  Superin- 
tendent as  to  any  facts  appearing  in  the  records  of  the  Benefit  Asso- 
ciation,  or   of   International    Harvester   Company,    International   Har- 
vester Company  of  America,  or  subsidiary  company,  or  that  any  writ- 
ing is  a  copy  taken  from  said  records,  or  of  any  instrument  on  file  in 
said   Benefit  Association,   or  with   International    Harvester   Company, 
International  Harvester  Company  of  America,  or  subsidiary  company, 
or  that  any  action  has  or  has  not  been  taken  by  the  Board  of  Trus- 
tees, or  the  Board  of  Directors,  shall  be  prima-facie  evidence  of  the 
facts  therein  certified. 

49.  Appeal. — All   questions    or   controversies    of   whatsoever    char- 
acter, arising  in  any  manner,  or  between  any  parties  or  persons,   in 
connection    with    the    Benefit    Association    or    the    operation    thereof, 
whether  as  to  any  claim  for  benefits  preferred  by  any  member  or  his 
legal  representative  or  his  beneficiary,  or  any  other  person,  or  whether 
as  to  the  construction  of  language  or  meaning  of  the  rules,  or  as  to 
any    writing,    decision,    instruction    or    acts    in    connection    with    the 
operation  of  the  Benefit  Association,  shall  be  submitted  within  sixty 
(60)  days  of  the  time  of  the  decision  from  which  an  appeal  is  taken, 


3QO  INDUSTRIAL  INSURANCE 

to  the  Superintendent,  whose  decision  shall  be  final  and  conclusive, 
unless  an  appeal  in  writing  from  such  decision  shall  be  taken  to  the 
Board  of  Trustees  within  thirty  (30)  days  after  notice  of  such  decision 
to  the  parties  interested. 

50.  Hearing. — When  an  appeal  is  taken  to  the  Board  of  Trustees 
it  shall  be  heard  by  the  Trustees  without  further  notice,  at  their  next 
stated  meeting,  or  at  such  future  meeting  or  time  as  they  may  desig- 
nate, and  shall  be  determined  by  a  vote  of  the  majority  of  the  mem- 
bers present  at  such  meeting,  and  the  decision  of  the  Trustees  shall 
be  final  and  conclusive  upon  all  parties,  without  exception  or  appeal. 

AMENDMENTS 

51.  Amendments  to  the  regulations  of  the  Benefit  Association  may 
be  proposed  to  the  Trustees  at  any  quarterly  meeting  by  any  member 
of  the  Board.     Amendments  so  proposed  may  be  acted  upon  only  at 
a  subsequent  meeting,  except  by  unanimous  consent. 

No  amendment  shall  be  operative  unless  adopted  by  the  affirmative 
vote  of  two-thirds  of  all  the  Trustees. 

Any  amendment  so  adopted  shall  be  binding  upon  the  Company 
and  the  members  of  the  Benefit  Association  and  all  persons  claiming 
through  them,  from  the  date  specified  in  the  announcement  thereof. 

PENSION  SYSTEM  OF  INTERNATIONAL  HARVESTER 
COMPANY  AND  SUBSIDIARY  COMPANIES 

The  Board  of  Directors,  after  careful  consideration  of  the  sub- 
ject and  an  examination  of  the  various  pension  systems  now  in 
operation,  have  approved  the  following  plan  as  the  best  and  most 
liberal  for  employees  who  by  long  and  faithful  service  have  earned  an 
honorable  retirement. 

The  Directors  establish  this  Pension  Fund  as  an  evidence  of  their 
appreciation  of  the  fidelity,  efficiency,  and  loyalty  of  the  employees. 

In  the  administration  of  this  pension  system  are  associated  Inter- 
national Harvester  Company,  International  Harvester  Company  of 
America,  and  subsidiary  companies. 

PENSION    BOARD 

I.  Administration. — The  administration  of  the  pension  fund  shall 
be  in  charge  of  a  Pension  Board  consisting  of  five  members  who 
shall  all  be  officers  or  employees  of  this  Company  or  of  affiliated  or 
subsidiary  companies,  and  shall  be  appointed  annually  by  the  Board  of 
Directors  of  this  Company,  to  serve  for  one  year  and  until  their 
successors  are  appointed  and  shall  qualify. 


APPENDICES  391 

2.  Officers. — The    Pension    Board    shall    elect   a   Chairman   and   a 
Secretary  from  among  its  members,  and  the  Treasurer  of  this  Com- 
pany shall  be  ex-officio  Treasurer  of  the  Fund.    The  Board  may  make 
and  enforce  rules  for  the  efficient  administration  of  the  pension  fund, 
subject   to   the   approval    of  the   Board   of    Directors.     The    Pension 
Board    shall   control   the   payment    of   pension   allowances    under    the 
rules  hereinafter  stated. 

3.  Quorum. — A  majority  of  the  Pension  Board  shall  constitute  a 
quorum  for  all  purposes. 

4.  Representation. — The  members  of  the  Board  shall  be  so  chosen 
that  the  principal  departments  of  the  business  shall  have  representa- 
tion. 

PENSION    FUND 

5.  The   Treasurer   of   the    Company   shall   be   the    custodian   and 
Treasurer   of   the   fund,    and   additions   shall  be  made   to   said   fund 
yearly    or    from    time   to    time    according    to    the    aggregate   pension 
allowances   and  the  amount   available   in  the  pension   fund   for   pay- 
ment of  the  same.     Should  the  aggregate  pension  allowances  exceed 
$100,000  in  any  one  year,  then  unless  the  Board  of  Directors  increases 
the  yearly  amount  usable  for  pensions,  a  new  rate  shall  be  established 
proportionately  reducing  all  allowances. 

Payments  from  this  fund  shall  only  be  made  in  accordance  with 
and  by  direction  of  the  Pension  Board. 

ELIGIBILITY 

6.  The  Pension  Board  may  authorize  the  payment  of  a  pension  to 
any  retired  employee  on  the  following  basis : 

a)  All  employees  of  this  Company  and  of  subsidiary  and  affiliated 
companies,  engaged  in  any  capacity,  are  eligible  to  pensions  as  herein- 
after stated. 

b)  All  male  employees  who  shall  have  reached  the  age  of  sixty- 
five  years,  and  have  been  twenty  or  more  years  in  the  service,  may, 
at  their  own  request,  or  at  the  discretion  of  the  Pension  Board,  be 
retired  from  active  service  and  become  eligible  to  a  pension. 

c}  All  male  employees  who  have  been  twenty  or  more  years  in 
the  service  shall  be  retired  at  the  age  of  seventy  years  on  the  first  day 
of  the  calendar  month  following  that  in  which  they  shall  have  attained 
said  age,  unless  at  the  discretion  of  the  Pension  Board  some  later 
date  be  fixed  for  such  retirement.  Persons  occupying  executive 
positions  are  exempt  from  maximum  age  limit. 


392  INDUSTRIAL  INSURANCE 

d)  All  female  employees  who  shall  have  reached  the  age  of  fifty 
years  and  have  been  twenty  or  more  years  in  the  service,  may  at  their 
own  request,   or  at  the  discretion   of  the  Pension  Board,  be   retired 
from  active  service  and  become  eligible  to  a  pension. 

e)  All  female  employees  shall  be  retired  at  the  age  of  sixty  years, 
on  the  first  day  of  the  calendar  month  following  that  in  which  they 
shall  have  attained  the  age,  unless  at  the  discretion  of  the   Pension 
Board,  a  later  date  be  fixed  for  such  retirement.     Persons  occupying 
executive  positions  are  exempt  from  maximum  age  limit. 

DEFINITIONS 

7.  The  terms  "service"  and  "in  the  "service"  apply  to  all  employees 
of  the  International  Harvester  Company,  or  of  any  affiliated  or  sub- 
sidiary companies  which  are  now  or  may  hereafter  be  owned  or  con- 
trolled by  it,  and  of  the  International  Harvester  Company  of  America, 
who  have  received  a  stated  and   regular   compensation   from   any  of 
said  companies.    The  term  of  service  shall  be  reckoned  from  the  date 
of  commencing  with  the  original  company  whose  property  and  busi- 
ness  shall  have  become   those  of   the   International    Harvester   Com- 
pany, or  any  subsidiary  companies,  or  of  the  International  Harvester 
Company  of  America. 

8.  Temporary  Absence. — A  temporary  lay-off  on  account  of  illness 
or  of'  reduction  of  force  is  not  to  be  considered  as  a  break  in  the  con- 
tinuity  of    service,   but   when    such    absence    exceeds    six    consecutive 
months  it  shall  be  deducted  in  computing  the  length  of  active  service. 

g.  Leaving  Service. — If  a  person,  after  leaving  the  service  for 
more  than  two  years,  shall  be  re-employed,  he  shall  be  considered  in 
his  relation  to  the  pension  system  as  a  new  employee. 

PENSION   ALLOWANCES    AND    CONDITIONS 

10.  Amount. — The  sums  which  the  Board  of  Pensions  may  author- 
ize to  be  paid  monthly  to  employees  retired  at  the  age  limit  shall  be 
as  follows :     For  each  year  of  active  service  an  allowance  of  one  per 
cent,  of  the  average  annual  pay  during  the  ten  years  next  preceding 
retirement ;  but  no  pension  shall  exceed  $100  per  month,  or  be  less 
than  18  per  month. 

11.  Payment. —  (a)   Pension   allowances   shall   be   paid  on  the   first 
of  each  month  from  the  date  of  retirement  until  the  death  of  employee. 

b)  At  the  discretion  of  the  Pension  Board  these  allowances  may 
be  continued  to  widows  and  orphans  of  a  pensioner  for  a  limited 
period. 


APPENDICES  393 

c)  Pension  allowances  shall  be  non-assignable,  and  an   attempted 
transfer  or  pledge  of  the  same  shall  not  be  recognized  by  the  Pension 
Board  and  may  in  its  discretion  work  a  forfeiture  thereof. 

d)  Pension   allowances   may  be   suspended   or   terminated  by   the 
Pension  Board  in  cases  of  gross  misconduct,  or  of  any  violation  of 
the  Rules,  or,  at  its  discretion,  may  be  paid  to  some  member  of  the 
family. 

e)  The    acceptance   of   the    pension    shall    not    debar    any    retired 
employee  from  engaging  in  any  other  business  which  in  the  judgment 
of  the  Pension  Board  is  not  prejudicial  to  the  interests  of  this  Com- 
pany or  of  any  affiliated  or  subsidiary  company,  but  he  cannot  re-enter 
service. 

/)  No  payments  for  pensions  shall  be  approved  by  the  Pension 
Board  until  payments  from  any  relief  fund  operated  by  this  Company, 
or  any  affiliated  or  subsidiary  company,  shall  cease. 

PENSIONS — HOW    COMPUTED 

12.  The  amount  of  pensions  granted  on  account  of  advanced  age 
will  depend,  as  before  stated,  on  two  conditions:  the  number  of  years 
the  person  has  served  the  Company,  and  the  amount  of  his  average 
wages  per  year  for  the  ten  years  next  preceding  retirement.  Thus, 
for  illustration,  if  the  average  pay  per  year  for  the  last  ten  years  of 
active  service  equals  $600,  and  if  the  service  has  been  continuous  for 
twenty-five  years,  the  pension  would  be  25  per  cent,  of  $600,  or  $150 
per  year,  or  $12.50  per  month.  Since  the  minimum  pension  has  been 
fixed  at  $18  per  month,  then  to  this  regular  percentage  $5.50  would 
be  added,  making  the  minimum  sum  of  $18. 

In  special  cases  where  the  term  of  service  is  less  than  twenty 
years,  the  pension  and  the  amount  of  same,  if  any,  will  be  deter- 
mined solely  at  the  discretion  of  the  Board  of  Pensions. 

Department  Heads  are  expected  to  keep  informed  of  the  where- 
abouts and  physical  condition  of  former  employees  receiving  pen- 
sions, and  are  required  to  advise  the  Secretary  of  the  Board  of 
Pensions  of  the-  death  of  the  pensioner,  and  of  any  other  circumstances 
which  would  affect  his  monthly  payment. 

A  physical  examination  by  a  Company  surgeon,  or  in  case  of 
female  employees,  by  a  surgeon  approved  by  the  Board  of  Pensions, 
will  be  required  of  employees  who  wish  to  be  retired  on  a  pension 
allowance  because  of  incapacity. 


394  INDUSTRIAL  INSURANCE 

HOW  TO   SECURE  A  PENSION 

13.  An  employee  wishing  to  apply  for  a  pension  should  first  take 
up   the  subject  with  the   Superintendent   at  the   Works   where   he  is 
employed,  or  the  head  of  the  department  in  which  he  is  serving,  or 
with  a  member  of  the  Pension  Board.    A  form  will  then  be  furnished, 
which  must  be  filled  out  and  signed,  giving  the  necessary  information 
concerning  the   applicant's    age,   length   of   service   and   wages.     This 
formal  application  must  be  signed  by  the  Works   Superintendent,  or 
head  of  department  employing  applicant,  and  then  sent  to  the  Secre- 
tary of  the  Pension  Board  at  his  office. 

NO   CONTRACTURAL   RIGHTS    CONFERRED 

14.  Neither  the  establishment  of  this  system  nor  the  granting  of 
a  pension,  nor  any  other  action  now  or  hereafter  taken  by  the  Pen- 
sion Board,  or  by  the  .Officers  of  this  Company,  shall  be  held  or  con- 
strued   as    creating    a    contract,    or    giving   to    any    officer,    agent    or 
employee  a  right  to  be  retained  in  the  service,  or  any  right  to  any 
pension    allowance    and    the    Company    expressly    reserves,    unaffected 
hereby,  its  right  to  discharge  without  liability,  other  than  for  salary  or 
wages  due  and  unpaid,  any  employee,  whenever  the  interests  of  the 
Company  may  in  its  judgment  so  require. 


APPENDIX  J 

MODEL  CONSTITUTION  AND   BY-LAWS  FOR  MUTUAL 
BENEFIT  ASSOCIATIONS 

CONSTITUTION  1 
ARTICLE  I 

SECTION  i.    This  association  shall  be  known  as  the  Mutual 

Benefit  Association. 

,  ARTICLE    II 

SECTION  i.  The  object  of  this  association  shall  be  the  relief  of 
its  members  in  case  of  sickness,  injury  or  disability  which  may  unfit 
them  for  their  daily  labor  and  the  provision  of  funeral  benefits  in  case 
of  death. 

ARTICLE    III 

SECTION  i.  The  regular  meetings  of  this  association  shall  be  held 
semi-annually  on  the  second  Tuesday  in  June  and  December.  Notice 
shall  be  posted  in  some  prominent  place  in  the  works  of  the  company 
at  least  three  days  before  the  meeting. 

SEC.  2.  Fifteen  members  shall  constitute  a  quorum  for  the  trans- 
action of  business. 

ARTICLE    IV 

SECTION  i.  The  officers  of  this  association  shall  be  a  President,  a 
Vice-President,  a  Secretary,  a  Treasurer,  and  a  Board  of  Directors 
consisting  of  the  President,  Vice-President,  Secretary,  and  six  elected 
members,  a  majority  constituting  a  quorum  for  the  transaction  of 
business. 

SEC.  2.  The  President,  Vice-President,  Secretary,  and  Treasurer 
shall  be  elected  to  serve  one  year.  The  first  year  that  this  goes  into 
effect  three  Directors  shall  be  elected  to.  serve  one  year  and  three 
to  serve  two  years,  and  thereafter  three  Directors  shall  be  elected  each 
year  to  serve  for  two  years.  All  officers  shall  hold  office  until  their 
successors  shall  have  been  elected  and  qualified. 

SEC.  3.  All  officers  shall  be  exempt  from  dues  and  assessments 
during  their  term  of  office. 

1  The  figures  used  are  for  an  association  with  a  membership  of  one 
hundred.  The  form  is  from  the  Cleveland  Chamber  of  Commerce. 

395 


396  INDUSTRIAL  INSURANCE 

BY-LAWS 
ARTICLE  I 

SECTION  i.  The  President  shall  preside  at  all  meetings,  call  special 
meetings  at  the  request  of  a  majority  of  the  Board  of  Directors,  or 
at  the  wi'itten  request  of  seven  members  of  the  association.  Notice 
of  special  meetings  must  be  posted  before  7:30  A.M.  of  the  day  of 
the  meeting.  The  President  shall  sign  all  orders  on  the  Treasurer  for 
money.  He  shall,  on  the  second  Tuesday  in  December  and  June, 
appoint  an  auditing  committee,  consisting  of  three  members  of  the 
association,  whose  duty  it  shall  be  to  audit  the  books  of  the  Secretary 
and  Treasurer  and  make  its  report  at  the  next  regular  meeting  of  the 
Board  of  Directors.  The  President  shall  enforce  all  rules  of  the 
association  and  perform  such  other  duties  as  may  be  required. 

SEC.  2.  The  Vice-President  shall  perform  the  duties  of  the  Presi- 
dent in  the  absence  of  the  latter. 

SEC.  3.  The  Secretary  shall  keep  and  preserve  all  records,  receive 
and  deliver  to  the  Treasurer  all  moneys  due  the  association,  take  a 
receipt  therefor,  give  each  member  a  receipt  for  dues  paid,  issue 
notices  of  meetings  and  perform  such  other  duties  as  the  office  may 
require. 

He  shall  give  a  bond  of  $100.  He  shall  receive  for  his  services 
a  salary  of  $25  per  year.  At  the  expiration  of  his  term  of  office  he 
shall  deliver  to  his  successor  books,  papers,  and  other  property  which 
belong  to  the  association. 

SEC.  4.  The  Treasurer  shall  receive  and  deposit  in  some  banking 
institution,  to  be  selected  by  the  Board  of  Directors,  all  moneys 
belonging  to  the  association  and  shall  pay  it  out  by  check  on  orders 
signed  by  the  President,  Secretary,  and  one  Director,  and  all  checks 
must  be  signed  by  the  Treasurer  and  countersigned  by  the  President. 
He  shall  give  a  bond  of  $ — ,  said  bond  to  be  furnished  by  a  surety 
company,  the  expenses  of  procuring  the  same  to  be  borne  by  the  asso- 
ciation. (See  note  to  Art.  Ill,  sec.  2.)  He  shall  receive  for  his  ser- 
vices a  salary  of  $10  per  year. 

SEC.  5.  An  investigating  committee,  consisting  of  three  members, 
shall  be  appointed  quarterly  by  the  President  and  shall  serve  three 
months.  Its  duty  shall  be  to  visit  the  sick  within  forty-eight  hours 
from  the  time  of  being  notified  by  the  Secretary  and  at  least  once  a 
week  thereafter,  and  report  his  or  her  condition  to  the  Secretary  in 
writing. 

SEC.  6.     The  Board  of  Directors  shall  have  general  supervision  of 


APPENDICES  397 

the  affairs  of  the  association,  and  shall  meet  regularly  once  each 
month.  It  shall  decide  who  are  entitled  to  benefits.  The  board  shall 
also  have  the  power  to  cause  the  expulsion  of  a  member  from  the 
association,  the  above  action  to  require  a  two-thirds  vote  of  those 
present. 

SEC.  7.  The  Board  of  Directors  shall  have  power  at  such  times 
as  in  its  judgment  is  just  and  necessary,  to  levy  an  assessment  on  the 
members  of  the  association  to  meet  the  contingencies  of  excessive 
sickness  or  accident ;  provided,  however,  that  such  assessment  shall 
not  exceed  fifty  cents  for  first-class  and  twenty-five  cents  for  second- 
class  members,  and  that  such  assessment  shall  be  levied  not  more  than 
twice  in  one  year.  Further  assessments  may  be  levied  by  a  two-thirds 
vote  of  the.  members  present  at  a  regular  or  special  meeting. 

SEC.  8.  When  an  officer  of  this  association  shall  leave  the  employ 
of  the  company  said  office  shall  be  declared  vacant  and  such  vacancy 
shall  be  filled  by  the  Board  of  Directors. 

ARTICLE    II 

SECTION  i.  Any  person,  after  being  in  the  employ  of  for 

thirty  days,  and  in  good  health,  shall  be  eligible  to  membership  in  the 
association  upon  application  to  the  Secretary  and  the  payment  of 
twenty-five  cents  for  admission.  All  applicants,  however,  shall  be 
subject  to  the  approval  of  the  Board  of  Directors;  this  approval  shall 
constitute  election  to  membership. 

SEC.  2.  Membership  shall  cease  upon  the  resignation,  suspension 
or  expulsion  of  a  member;  upon  his  ceasing  to  be  in  the  employ  of 

or  upon  his  neglecting  to  pay  his  dues;  and  it  shall  be  the 

duty  of  the  Board  of  Directors  to  cause  the  names  of  persons  coming 
within  any  of  the  above  classes  to  be  erased  from  the  roll  of  mem- 
bership. Temporary  suspension  from  work  shall  not  be  considered  as 
ceasing  to  be  in  the  employ  of  the  company. 

SEC.  3.  Anyone,  after  leaving  the  association,  but  remaining  in  the 
employ  of  the  company,  may  become  a  member  again  by  complying 
with  the  requirements  of  Art.  II,  sec.  I,  and  by  paying  all  back  dues 
and  assessments  from  the  time  he  left  the  association. 

ARTICLE    III 

SECTION  I.  The  funds  of  the  association  shall  consist  of  the 
admission  fees,  assessments,  weekly  or  monthly  dues  of  members,  and 
any  special  gift  to  the  association. 

SEC.  2.    When  the  amount  of  money  in  the  treasury  shall  have 


398 


INDUSTRIAL  INSURANCE 


reached  $750  there  shall  be  no  further  collections,  except  in  the  case 
of  new  members,  until  the  amount  has  been  reduced  to  $400,  after 
which  the  regular  dues  shall  be  collected  until  the  amount  in  the 
fund  shall  again  have  reached  $7S0.2 

ARTICLE   IV 

SECTION  i.  The  membership  shall  be  divided  into  two  classes : 
the  first  class  to  consist  of  those  whose  regular  weekly  pay  is  $7.50 
or  more,  and  the  second  class  of  those  whose  weekly  pay  is  less 
than  $7.50. 

SEC.  2.  The  dues  in  the  first  class  shall  be  10  cents  per  week  (or 
50  cents  per  month),  and  in  the  second  class  5  cents  per  week  (or  25 
cents  per  month),  to  be  paid  to  the  Secretary  in  advance.3 

SEC.  3.     All  money  received  shall  be  placed  in  one  general  fund. 

ARTICLE  v 

SECTION  I.  Any  member  of  the  association  unable  to  attend  to 
his  or  her  duties  through  sickness  or  disability  must  notify  the  Secre- 
tary at  once  of  the  date  of  such  sickness  or  disability  and  shall  be 
entitled  to  receive  from  the  association  out  of  the  funds  then  on 
hand,  if  a  member  of  the  first  class,  one  dollar  per  day,  and  if  of  the 
second  class,  fifty  cents  per  day,  Sundays  excepted,  for  a  period  of 
not  more  than  thirteen  weeks. 

SEC.  2.  When  any  member  is  entitled  to  benefits,  the  Secretary 
shall  issue  an  order  on  the  Treasurer  countersigned  by  the  President 
and  one  Director,  and  such  benefits  shall  be  paid  weekly  in  such 
amounts  as  the  By-laws  provide. 

SEC.  3.  No  benefit  to  be  paid  to  a  member  for  the  first  week  of 
sickness,  except  when  the  duration  of  sickness  extends  to  two  weeks 

2  For  associations  of  different  numbers  of  members : 


.    Members 

Minimum 
Amount 

Maximum 
Amount 

Amount  of  Bond 
of  Treasurer 

so 

IOO 

200 
300 
500 

IOOO 

$    3°o 
400 
500 
500 
75° 
1,000 

$    5°° 
75° 
1,000 
1  ,200 
1.75° 
3,000 

$    500 

750 
1,000 

1,200 

1,75° 
3,000 

3  In  some  cases  it  is  found  advisable  that  the  paymaster  of  the  com- 
pany be  authorized  to  deduct  the  amount  of  each  individual's  regular  pay 
on  pay  days  and  to  turn  the  amount  over  to  the  Treasurer  of  the  associa- 
tion. 


APPENDICES  399 

or  more;  then  benefits  shall  be  paid  for  the  full  term  of  sickness, 
including  fractional  parts  of  a  week. 

SEC.  4.  Any  member  failing  to  notify  the  Secretary  within  one 
week  from  date  of  commencement  of  sickness  or  disability  shall  be 
considered  to  be  on  the  sick  list  only  from  date  on  which  notice  is 
given. 

SEC.  5.  No  member  shall  be  entitled  to  benefits  until  he  or  she 
has  been  a  member  of  the  association  for  four  weeks.  No  member 
who  is  in  arrears  for  dues  shall  receive  benefits. 

SEC.  6.  Any  member  in  arrears  for  dues  for  four  weeks  shall  be 
considered  dropped,  and  his  or  her  name  shall  be  taken  off  the  list 
of  members. 

SEC.  7.  Any  member  having  drawn  benefits  for  the  full  term  of 
thirteen  weeks  shall  not  be  entitled  to  further  benefits  until  he  or  she 
shall  have  been  at  work  for  a  period  of  not  less  than  four  weeks, 
and  no  one  shall  draw,  during  one  year,  benefits  for  more  than  eigh- 
teen weeks'  disability,  unless  by  special  action  of  the  Board  of 
Directors. 

SEC.  8.  If  any  member  entitled  to  benefits  and  having  drawn  the 
same  and  returned  to  work,  is  again  taken  sick  within  a  period  of 
four  weeks,  such  second  sickness  shall  be  considered  as  a  continua- 
tion of  the  first  sickness,  and  the  member  shall  be  entitled  to  benefits 
for  such  a  number  of  days,  only,  as  added  to  the  previous  term  of 
sickness,  shall  make  thirteen  weeks. 

SEC.  9.  The  Board  of  Directors  shall  have  the  right  in  all  cases 
to  require  the  certificate  of  a  physician  in  good  standing  in  regard  to 
the  sickness  or  disability  of  a  member. 

SEC.  10.  No  benefits  shall  be  paid  for  any  sickness,  injury  or 
disability  arising  from  intemperance  or  from  any  immoral  or  unlaw- 
ful act  on  the  part  of  any  member. 

SEC.  ii.  Upon  the  death  of  a  member  in  good  standing,  and  one 
who  has  been  a  member  for  at  least  two  months,  a  funeral  benefit, 
consisting  of  $75,  if  such  member  be  of  the  first  class,  and  $37.50  if 
of  the  second  class,  shall  be  paid  to  his  widow  or  legal  representatives 
within  five  days  after  due  notice  has  been  given  to  the  Secretary. 

SEC.  12.  In  the  event  of  the  death  of  any  member  of  whatever 
grade,  suitable  flowers  shall  be  procured  at  a  cost  not  to  exceed  $5, 
and  presented  to  the  relatives  or  friends  of  the  deceased  member  by  a 
committee  composed  of  the  President  of  the  association  and  Chairman 
of  the  Investigating  Committee. 


400  INDUSTRIAL  INSURANCE 

SEC.  13.  Anyone  detected  in  obtaining  or  attempting  to  obtain 
benefits  fraudulently,  shall  be  expelled  from  the  association  by  the 
Board  of  Directors. 

SEC.  14.  All  properties  of  the  association  held  by  officers  must 
be  turned  over  to  their  successors  at  the  expiration  of  their  term  of 
office. 

SEC.  15.  A  quarterly  statement  of  the  financial  condition  of  the 
association  shall  be  posted  in  some  prominent  place  in  the  works  of 
the  company. 

ARTICLE    VI 

SECTION  I.  The  constitution,  by-laws  and  special  rules  of  this 
association  may  be  amended  or  repealed  at  any  regular  or  special 
meeting  by  a  two-thirds  vote  of  all  the  members  present  at  such 
meeting,  provided,  however,  that  two  weeks'  notice  of  such  intended 
action  shall  be  given  to  the  Secretary  and  inserted  in  the  call  for 
such  meeting,  and  that  notice  of  the  meeting  shall  be  posted  at  least 
one  week  previous  to  the  meeting  in  some  prominent  place  in  the 
factory. 

RULES 

1.  The  Secretary  may  adopt  any  method  for  the  collection  of  the 
dues  subject  to  the  approval  of  the  Directors. 

2.  No   person   shall    speak   more    than    twice    or   more    than   ten 
minutes  at  a  time  in  the  discussion  of  any  business  which  may  come 
before  the  association,  except  by  unanimous  consent. 

3.  Motions  to  adjourn  without  date,  to  lay  on  table  and  the  pre- 
vious question  shall  be  decided  without  debate. 

4.  No  debate  shall  be  allowed  on  an  appeal  from  the  decision  of 
the   chair,   except  an  explanation  by  the   chair,   and  by  the  member 
making  the  appeal. 

5.  Cushing's  Manual  shall  be  the  parliamentary  guide  of  the  asso- 
ciation, except  as  provided  by  the  constitution  and  by-laws. 

6.  The    order   of    business    at   the    regular   meetings    shall    be    as 
follows : 

(1)  Roll  call.  (5)  Unfinished  business. 

(2)  Reading  of  minutes.  (6)  New  business. 

(3)  Report  of  officers.  (7)  Election  of  officers. 

(4)  Report  of  committees.         (8)  Adjournment. 

7.  The  order  of  business  at  the  Directors'  meetings   shall  be  as 
follows : 


APPENDICES 


401 


(1)  Roll  call. 

(2)  Reading  of  minutes. 

(3)  Report  of  officers. 

(4)  Report  of  committees. 

(5)  Application  for  membership 

and  benefits. 


(6)  Election  of  members. 

(7)  Unfinished  business. 

(8)  New  business. 

(9)  Adjournment. 


APPENDIX  K 

CONSTITUTION  AND  BY-LAWS  OF  THE  SCOTTDALE 
IRON  AND  STEEL  WORKERS'  BENEFICIAL  ASSOCIA- 
TION, SCOTTDALE,  PA. 

Amended  May,  1902 

PREAMBLE 

Considering  the  infirmities  of  life,  and  the  many  accidents  which 
happen  to  the  employees  of  Iron  and  Steel  Works  from  time  to  time, 
and  knowing  from  the  experience  of  past  ages  the  utility  of  well- 
regulated  societies,  we  have  formed  ourselves  into  a  Beneficial  Asso- 
ciation and  agree  to  be  bound  by  the  following  Constitution  and 
By-laws : 

CONSTITUTION 
ARTICLE  I 

This  Association  shall  be  known  as  the  Scottdale  Iron  and  Steel 
Workers'  Beneficial  Association,  and  must  be  located  at  Scottdale,  Pa. 

ARTICLE  II 

The  officers  of  this  Association  shall  consist  of  a  President,  Vice- 
President,  Secretary,  Treasurer,  and  seven  Directors,  all  of  whom  shall 
be  elected  by  ballot,  to  serve  for  one  year.  The  election  shall  take 
place  at  the  last  meeting  in  December  of  each  year.  Each  officer 
elected  must  receive  a  majority  of  the  votes  cast. 

ARTICLE    III 

It  shall  be  the  duty  of  the  President  to  preside  at  all  meetings  of 
the  Association,  appoint  all  committees,  unless  otherwise  ordered  by 
the  Association,  sign  all  orders  on  the  Treasurer,  call  special  meet- 
ings at  the  request  of  seven  members,  or  when,  in  his  judgment,  he 
deems  it  necessary;  to  preserve  order  during  the  meetings,  and  to  see 
that  the  Constitution  and  By-laws  are  faithfully  observed. 

ARTICLE    IV 

It  shall  be  the  duty  of  the  Vice-President  to  preside  at  all  meet- 
ings in  the  absence  of  the  President,  and  in  case  of  the  death,  resigna- 
tion or  removal  of  the  President,  he  shall  become  President  for  the 
balance  of  the  term. 

402 


APPENDICES  403 

ARTICLE    V 

It  shall  be  the  duty  of  the  Secretary  to  keep  records  of  the  pro- 
ceedings of  all  the  meetings  in  a  book  for  that  purpose;  to  keep  a 
roll  of  members;  to  draw  all  orders  on  the  Treasurer,  when  ordered 
by  the  Directors,  and  to  perform  all  duties  appertaining  to  his  office, 
for  which  he  shall  receive  a  salary  of  twelve  dollars  ($12)  per  annum. 

ARTICLE    VI 

The  Treasurer  shall  receive  all  money  belonging  to  the  Association 
and  shall  deposit  same  in  bank  to  the  credit  of  the  Association.  He 
shall  pay  no  money  unless  on  an  order  granted  by  the  Directors,  signed 
by  the  President  and  attested  by  the  Secretary.  No  checks  upon  the 
banks  shall  be  valid  unless  signed  by  the  Treasurer  and  countersigned 
by  the  President.  He  shall  keep  a  strict  account  of  all  receipts  and 
disbursements  and  shall  give  security  in  the  sum  of  one  thousand 
dollars  ($1,000)  for  the  faithful  discharge  of  his  duty,  for  which  he 
shall  receive  a  salary  of  one  hundred  and  fifty  dollars  ($150)  per 
annum. 

ARTICLE    VII 

SECTION  i.  It  shall  be  the  duty  of  the  Board  of  Directors  to 
examine  all  claims  against  the  Association  and  to  instruct  the  Secre- 
tary to  draw  orders  on  the  Treasurer  for  such  claims  as  they  deem 
just.  They  shall  visit  all  sick  or  afflicted  members. 

SEC.  2.  In  case  the  Directors  have  any  doubt  as  to  any  claim  they 
shall  have  the  power  to  employ  a  physician,  whose  report  shall  be 
taken  and  who  shall  be  paid  by  the  Association.  If  a  member  shall 
be  found  to  be  imposing  upon  the  Association,  the  benefits  shall  be 
stopped;  he  shall  be  reported  at  the  next  meeting,  and  shall  be  fined 
or  expelled,  as  a  majority  of  the  members  present  shall  determine. 

ARTICLE   VIII 

SECTION  i.  The  Association  shall  meet  once  every  month  at  the 
call  of  the  President,  for  the  collection  of  dues  and  fines,  and  for  the 
transaction  of  all  business  appertaining  to  the  Association. 

SEC.  2.    Ten  members  shall  constitute  a  quorum. 

ARTICLE    IX 

All  persons  between  the  ages  of  sixteen  and  forty-eight  years  who 
have  been  employed  at  the  Scottdale  Works  of  the  American  Sheet 
Steel  Co.  for  a  period  of  three  (3)  months  or  longer,  and  who  are 
free  from  bodily  disease  and  at  work,  are  eligible  to  become  members. 


404  INDUSTRIAL  INSURANCE 

ARTICLE    X 

All  applicants  for  membership  must  be  elected  by  ballot.  Should 
there  appear  three  black  balls  in  the  ballot-box  the  applicant  is  rejected. 
The  depositing  of  two  black  balls  refers  the  application  to  an  invest- 
igating committee,  which  is  to  investigate  and  report  at  the  next  meet- 
ing. The  members  depositing  the  two  black  balls  shall  state  their 
objections  to  the  said  committee,  and  if  objections  are  sustained  by  a 
majority  of  the  members  present,  the  applicant  is  rejected. 

In  other  cases,  where  a  vote  is  required,  it  may  be  done  by  calling 
for  the  yeas  and  nays  or  by  showing  of  hands. 

ARTICLE    XI 

The  Association  at  the  last  meeting  in  December  shall  elect  three 
auditors  from  the  members,  to  inspect  all  books,  accounts,  and  docu- 
ments belonging  to  the  Association,  and  report  on  the  same  to  the 
Association  at  the  first  meeting  in  January  following. 

ARTICLE    XII 

The  Association  shall  be  supported  by  each  member  paying  one 
dollar  ($i)  per  month  as  dues,  as  long  as  he  remains  a  member  of  the 
Association;  and  no  member  shall  be  exempt  from  the  regular  pay- 
ment in  consequence  of  sickness  or  disability.  All  newly  admitted 
members  shall  pay  their  entrance  money  (50  cents)  in  full,  and  no 
partial  payment  shall  be  taken  from  any  member  for  his  monthly 
contribution. 

ARTICLE   XIII 

If  any  member  entitled  to  receive  benefits  shall  owe  the  Asso- 
ciation for  dues  or  fines,  the  amount  of  such  dues  or  fines  shall  be 
deducted  by  the  Secretary  before  benefits  are  paid. 

ARTICLE    XIV 

Any  member  intending  to  apply  for  benefits  must  make  his  con- 
dition known  to  the  President  or  Directors,  on  or  before  the  sixth 
day  of  his  sickness.  Any  member  not  conforming  to  this  rule  shall 
not  be  entitled  to  benefits  until  the  sixth  day  after  he  complies. 

ARTICLE    XV 

Any  member  who  has  paid  his  entrance  money  and  membership 
fees  for  one  month  and  who  may  be  unable  to  follow  his  employ- 
ment owing  to  sickness  or  accident,  providing  his  inability  to  work 
lasts  more  than  seven  (7)  days,  shall,  after  the  expiration  of  these 
seven  (7)  days,  be  entitled  to  receive  one  dollar  ($i)  per  day  (Sun- 


APPENDICES  405 

days  excepted),  during  the  continuance  of  his  disability,  subject  to  the 
following  limitations :  Sick  benefits  for  any  one  accident  or  sickness 
shall  not  be  paid  for  a  period  exceeding  four  (4)  months,  and  no 
member  who  has  received  benefits  for  four  (4)  continuous  months 
shall  be  entitled  to  benefits  for  a  second  accident  or  a  second  period 
of  sickness  until  one  (i)  month  has  elapsed  from  the  expiration  of 
the  four  (4)  months  previously  mentioned.  It  is,  however,  expressly 
provided  that  all  the  rights  and  benefits  provided  for  in  Arts.  XX, 
XXI,  and  XXII,  which  regulate  payments  in  the  event  of  the  death 
of  a  member,  his  wife  or  his  child,  shall  continue  without  interrup- 
tion, except  as  provided  for  in  Art.  XXIV. 

ARTICLE    XVI 

Any  member  who  shall  be  injured  by  accident  to  such  an  extent 
as  to  disable  him  at  once  and  permanently  from  following  his  usual 
or  other  employment,  shall  be  entitled  to  the  benefits  as  provided  in 
the  previous  article,  and  shall  also  receive  the  sum  of  $2.50  from 
each  member,  the  same  to  be  collected  and  paid  at  the  expiration  of 
the  four  months,  after  which  he  shall  cease  to  be  a  member. 

ARTICLE   XVII 

If  a  member  starts  to  work  after  being  sick  or  disabled,  and  finds, 
after  he  has  worked  one  day  or  part  thereof,  that  he  is  unable  to 
continue,  he  shall  forfeit  benefits  for  one  day  only,  but  should  he 
work  more  than  one  day  before  finding  himself  unable  to  continue 
work,  he  shall  receive  no  benefits  until  the  eighth  day  after  such 
cessation  from  work,  and  so  on  as  per  Art.  XV,  provided  that  no 
member  shall  receive  more  than  four  (4)  months  benefits  for  one  and 
the  same  sickness. 

ARTICLE   XVIII 

If  the  sickness  of  any  member  be  the  result  of  intemperance, 
immoral  conduct,  or  self-abuse  in  any  manner,  he  shall  not  be  entitled 
to  benefits,  the  same  to  be  determined  by  the  Board  of  Directors,  as 
in  Art.  VII. 

ARTICLE     XIX 

SECTION  i.  Dues  are  paid  in  advance  on  the  first  day  of  each 
calendar  month,  and  arrears  as  provided  for  in  sec.  3  of  this  article 
shall  be  counted  from  the  first  day  of  each  calendar  month  aforesaid. 

SEC.  2.  The  funds  remaining  in  the  Treasury  of  this  Association 
at  the  expiration  of  the  year  shall  be  divided  among  the  members 
after  deducting  the  entrance  fee. 


406  INDUSTRIAL  INSURANCE 

SEC.  3.  Any  member  six  weeks  in  arrears  for  dues  shall  not  be 
entitled  to  a  dividend  or  benefits. 

SEC.  4.  All  fines  and  dues,  if  any,  shall  be  deducted  before  a  mem- 
ber receives  a  dividend  or  benefits. 

SEC.  5.  Members  shall  be  entitled  to  dividends  pro  rata,  according 
to  the  length  of  membership. 

ARTICLE    XX 

At  the  death  of  any  member,  his  wife  or  nearest  of  kin  shall  be 
entitled  to  fifty  dollars  ($50)  from  the  general  treasury  for  funeral 
expenses  and  to  an  assessment  of  one  and  one-half  dollars  ($1.50) 
levied  upon  each  member. 

ARTICLE    XXI 

At  the  death  of  the  wife  of  any  member,  said  member  shall 
receive  fifty  dollars  ($50)  from  the  general  treasury  for  funeral 
expenses. 

ARTICLE   XXII 

At  the  death  of  any  member's  child  who  is  under  sixteen  years  of 
age,  or  at  the  death  of  his  father  or  mother,  where  said  member  is  a 
single  man,  and  he  having  been  their  only  support,  said  member  shall  be 
entitled  to  the  sum  of  twenty-five  dollars  ($25)  for  funeral  expenses. 

ARTICLE   XXIII 

In  the  event  of  the  funds  becoming  low  through  sickness  or  death, 
the  Directors  shall  devise  measures  for  increasing  said  funds.  They 
shall  report  their  recommendations  at  a  meeting  of  the  Association 
called  for  the  special  purpose  of  receiving  such  report,  and  the 
methods  for  increasing  the  funds  decided  upon  at  said  special  meeting 
shall  be  binding  upon  all  the  members  of  the  Association. 

ARTICLE   XXIV 

Any  member  leaving  or  having  been  discharged  from  the  works, 
may  retain  his  membership  by  the  regular  payment  of  his  monthly 
dues  and  assessments  until  the  last  day  of  December,  subject  to  the 
provision  of  Art.  xix,  sec.  3. 

ARTICLE    XXV 

Any  sick  or  disabled  member  residing  away  from  the  place  of 
meeting,  claiming  benefits,  shall  send  to  the  Association  within  one 
week  after  being  taken  sick,  a  written  application  together  with  a 
certificate  from  the  attending  physician,  and  shall  forward  additional 
certificates  at  least  once  every  two  weeks  during  the  time  for  which 


APPENDICES  407 

benefits  are  claimed.     Directors   are  empowered  to  demand  a  sworn 
statement  when  they  may  consider  it  necessary. 

ARTICLE   XXVI 

SECTION  I.  Any  member  failing  to  pay  his  dues  for  four  (4) 
consecutive  months  shall  cease  to  be  a  member,  and  the  Secretary 
shall  strike  his  name  from  the  roll. 

SEC.  2.  Any  member  having  received  benefits  and  neglecting  to 
give  notice  to  the  Directors,  declaring  himself  off  the  sick  list  when 
able  to  resume  work,  shall  be  expelled  from  the  Association. 

ARTICLE   XXVII 

Any  member  who  shall  use  disrespectful  or  abusive  language  to 
an  officer  of  this  Association  for  discharging  the  duties  pertaining  to 
his  office  shall  be  expelled. 

ARTICLE    XXVIII 

No  alteration  or  amendment  shall  be  made  to  this  Constitution 
unless  by  a  two-thirds  vote  of  the  members  present  at  a  regular 
meeting  and  one  month's  previous  notice. 

ARTICLE  XXIX 

Each  member  shall  be  furnished  with  a  copy  of  the  Constitution 
and  By-laws  free  of  charge,  but  any  member  destroying  or  losing  the 
first  one  shall  pay  for  the  second. 

ARTICLE   XXX 

Any  member  found  drinking  intoxicants  during  the  time  he  is 
receiving  benefits  (unless  said  intoxicants  shall  have  been  prescribed 
by  a  physician,  in  which  case  they  shall  be  taken  at  the  beneficiary's 
home  only),  shall  be  fined  two  dollars  ($2)  for  each  offense,  upon  due 
proof  thereof ;  and  if  any  member  shall  become  intoxicated  while 
receiving  benefits,  he  shall  be  fined  ten  dollars  ($10)  upon  conviction. 

ARTICLE   XXXI 

Should  any  dispute  arise  in  the  Association  as  to  the  true  intent 
and  meaning  of  any  section  of  these  By-laws,  the  Chair  shall  appoint 
a  committee  of  three  (3)  to  construe  the  section  and  to  report  their 
construction  to  the  Association  for  approval. 

ARTICLE  XXXII 

SECTION  i.  An  officer  of  this  Association  may  be  removed  from 
office  for  misconduct  or  neglect  of  duty  by  a  two-thirds  vote  of  the 


408  INDUSTRIAL  INSURANCE 

members  present  at  any  regular  meeting  after  he  shall  have  been 
served  with  a  copy  of  the  charges  preferred  against  him,  one  month 
previous  to  taking  action  on  the  said  charges. 

SEC.  2.  When  charges  are  preferred  against  an  officer,  the  Board 
of  Directors  may,  if  they  deem  it  for  the  best  interests  of  the  Asso- 
ciation, suspend  such  officer  pending  the  action  of  the  Association. 

SEC.  3.  Charges  shall  be  considered  as  preferred  when  signed  by 
three  members  and  delivered  to  the  President. 

RULES    OF    ORDER 

1.  No  member  shall  be  interrupted  while  speaking,  unless  it  shall 
be  to  call  him  to  order,  or  for  the  purpose  of  explanation. 

2.  If  any  member  while  speaking  be  called  to  order  he  shall,  at  the 
request  of  the  Chair,  take  his  seat  until  the  question  of   order  has 
been  determined,  when,  if  permitted,  he  may  proceed. 

3.  Each   member,    when   speaking,    shall   be    standing,    respectfully 
address  the  Chair,  confine  himself  to  the  question  under  debate,  and 
avoid  all  personal,  indecorous  or  sarcastic  language. 

4.  If  two  or  more  members  arise  at  the  same  time,  the  President 
shall  decide  which  is  entitled  to  the  floor. 

5.  Appeals  may  be  taken  from  the  decision  of  the   Chair,  but  a 
two-thirds  vote  is  necessary  to  sustain  such  appeal. 

6.  The  President  shall  be  guided  by  the  Congressional  Manual  in 
all  his  decisions. 

7.  No  member  shall  speak  more  than  twice,   or  longer  than  five 
minutes,  on  the  same  subject,  unless  by  permission  of  the  Association. 

8.  A  member,  if  under  the  influence  of  liquor,  will  not  be  allowed 
to  address  the  Chair  and  shall  leave  the  hall  at  the  request  of  the 
President.     Any  member  refusing  to  comply  with  said  request  shall 
be  fined  one  dollar    ($i)    for  the  first  offense  and  expelled  for  the 
second  offense. 

ORDER   OF    BUSINESS 

1.  Calling  the  meeting  to  order.  9.  Deferred  business. 

2.  Calling  roll  of  officers.  10.  New  business. 

3.  Reading  the  minutes.  n.  Remarks  for  benefit  of  Asso- 

4.  Report  of  relief  committee.  ciation. 

5.  Proposition  of  candidates.  12.  Collection  of  dues. 

6.  Balloting  for  candidates.  13-  Repoit  of  Treasurer. 

7.  Communications  and  bills.  14.  Calling  roll  of  members. 

8.  Report  of  business  committee.  15.  Adjournment. 


APPENDICES  409 

At  a  regular  meeting,  held  February  21,  1903,  Art.  XXIV  was 
amended  to  read  as  follows:  "If  any  member  leaves  the  employ  of 
the  American  Sheet  Steel  Company  at  Scottdale,  either  voluntarily  or 
by  reason  of  his  being  discharged,  his  membership  in  the  Association 
shall  cease  from  the  date  of  such  cessation  of  employment,  and  the 
proportion  of  treasury  funds  attaching  to  his  membership  shall  be 
returned  to  him." 


APPENDIX  L 

MUTUAL  BENEFIT  ASSOCIATION   OF  THE   STUDEBAKER 
BROS.  MFG.  CO.,   SOUTH  BEND,  IND. 

CONSTITUTION  AND  BY-LAWS 

ARTICLE  I    NAME 

SECTION  i.  The  Carriage  Trimmers'  Mutual  Benefit  Association 
of  the  Studebaker  Bros.  Mfg.  Co.  of  South  Bend,  Ind. 

ARTICLE     2 

SECTION  i.  The  object  of  this  Association  shall  be  the  mutual 
relief  of  members  in  case  of  sickness  or  accident  when  sufficient  to 
unfit  them  for  their  daily  labors,  or  when  detained  from  their  work 
by  quarantine. 

ARTICLE  3 

SECTION  i.  Membership  in  this  Association  shall  consist  of  one 
class,  composed  of  full  and  half  certificates. 

SEC.  2.  Any  person  making  application  for  membership  in  this 
Association  shall  pay  an  entrance  fee  of  one  dollar  ($i)  for  a  full 
certificate  and  fifty  cents  (BOC.)  for  a  half  certificate. 

Any  member  changing  from  a  half  certificate  to  a  full  certificate 
shall  pay  a  fee  of  fifty  cents  (5oc.),  and  no  changes  or  erasures  from 
the  roll  of  membership  shall  be  made  without  the  Secretary  being 
duly  notified. 

SEC.  3.  A  member  shall  not  be  allowed  to  hold  but  one  full  cer- 
tificate. 

SEC.  4.  All  applications  for  membership  must  be  made  to  the 
secretary  in  writing,  and  the  person  making  the  application  must  be 
in  good  health  and  have  been  thirty  days  prior  to  the  date  of  making 
such  applications. 

SEC.  5.  Connections  with  this  Association  shall  terminate  when 
the  member  has  been  suspended  or  expelled  by  the  order  of  the  Board 
of  Directors,  or  when  the  said  member  is  in  arrears  for  weekly  or 
extra  assessments. 

ARTICLE    4 

SECTION  i.  The  officers  of  this  Association  shall  consist  of  a 
President,  first  and  second  Vice-Presidents,  and  six  Directors;  the 

410 


APPENDICES  411 

President  to  act  as  the  chairman  of  the  Board  of  Directors. 

SEC.  2.  The  Board  of  Directors  shall  meet  Friday  of  each  week 
and  at  such  other  times  as  the  President  shall  appoint. 

SEC.  3.  All  officers  shall  be  elected  by  ballot  at  the  annual  meet- 
ing and  shall  hold  office  one  year,  or  until  their  successors  have  been 
elected. 

ARTICLE  5 

SECTION  i.  The  President  shall  preside  at  all  meetings  of  the 
Association  and  Board  of  Directors  and  he  shall  cast  a  deciding  vote. 
He  shall  call  special  meetings  at  the  request  of  a  majority  of  the 
Board  of  Directors,  or  at  the  written  request  of  ten  members  of  the 
Association;  he  shall  sign  all  orders  on  the  Treasurer  for  money  or 
supplies. 

SEC.  2.  Upon  the  notice  of  the  Secretary  of  the  sickness  of  a 
member,  the  President  shall  at  once  appoint  a  visiting  committee  of 
three  members,  whose  duty  it  shall  be  to  visit  the  members  in  question 
and  report  to  the  Secretary  as  soon  as  possible.  The  President  shall 
enforce  all  rules  of  the  Association  and  perform  such  other  duties 
as  may  be  required  of  him. 

SEC.  3.  The  Vice-President  shall  perform  the  duties  of  Presi- 
dent in  the  absence  of  the  latter. 

SEC.  4.  The  Secretary  may  adopt  any  method  for  the  collection 
of  assessments  as  he  may  deem  best,  subject  to  the  approval  of  the 
Board  of  Directors.  He  shall  turn  over  all  moneys  to  the  Treasurer, 
and  shall  keep  all  records,  blank  forms  and  other  printed  matter,  issue 
all  notices  of  special  meetings  and  perform  such  other  duties  as  the 
office  may  require  of  him.  He  shall  give  a  bond  of  twenty-five  dollars 
($25)  subject  to  the  approval  of  the  Board  of  Directors  and  shall 
receive  two  dollars  ($2)  per  year  for  his  services. 

SEC.  5.  The  Treasurer  shall  receive  and  hold  all  moneys  belong- 
ing to  the  Association,  and  shall  pay  it  out  only  upon  orders  signed 
by  the  President  and  not  less  than  four  Directors,  he  shall  invest  the 
funds  of  the  Association  subject  to  the  approval  of  Directors  and 
shall  make  a  quarterly  report  to  the  Board  of  Directors.  He  shall 
give  a  bond  of  five  hundred  dollars  ($500)  subject  to  the  approval 
of  the  Board  of  Directors,  and  shall  receive  one  dollar  ($i)  per 
year  for  his  services. 

SEC.  6.  The  Directors  with  the  President  shall  have  general  super- 
vision of  the  affairs  of  the  Association,  they  with  the  President  shall 
decide  who  are  entitled  to  relief  and  shall  audit  the  books  of  the 


412  INDUSTRIAL  INSURANCE 

Association  every  six  months  or  at  any  time  they  may  deem  it  best. 
They  with  the  President  shall  have  the  power  to  levy  an  assessment 
on  the  members  of  the  Association  to  meet  the  contingencies  of  exces- 
sive demands  for  relief,  provided  such  assessment  shall  not  exceed 
fifty  cents  (5oc.)  for  holders  of  a  full  certificate  and  twenty-five 
cents  (25c.)  for  holders  of  a  half  certificate.  They  shall  hear  and 
decide  all  questions  in  dispute  concerning  members  of  this  Association. 

SEC.  7.  Any  member  having  accepted  office  in  this  Association 
will  be  expected  to  serve  the  full  term  or  pay  one  dollar  ($i)  on 
vacating  his  office;  unless,  on  his  excuse  being  accepted  by  the  Board 
of  Directors,  he  be  allowed  to  retire  from  office. 

SEC.  8.  All  vacancies  in  the  offices  of  this  Association  shall  be 
filled  by  ballot  at  a  special  meeting  called  for  that  purpose  and  such 
meeting  shall  be  called  within  four  days  after  an  office  has  become 
vacant. 

ARTICLE  6 

SECTION  i.  The  regular  meeting  of  this  Association  shall  be  held 
annually  on  the  second  Monday  in  July. 

SEC.  2.  Ten  members  shall  constitute  a  quorum  for  the  transac- 
tion of  business  and  no  business  shall  be  transacted  unless  a  quorum 
be  present. 

ARTICLE  7 

SECTION  I.  The  funds  of  this  Association  shall  consist  of  entrance 
fees,  assessments,  extra  assessments,  and  voluntary  contributions. 

SEC.  2.  The  weekly  assessments  for  full  certificates  shall  be  ten 
cents  and  for  half  certificates  shall  be  five  cents  per  week,  to  be  paid 
in  advance  to  the  Secretary  every  two  weeks,  on  Saturday  following 
pay  day. 

SEC.  3.  Arrears  of  assessments  cannot  be  received  after  a  lapse 
of  four  weeks  except  by  order  of  the  Board  of  Directors  and  after 
the  payment  of  arrears  the  member  becomes  a  member  in  good 
standing. 

SEC.  4.  Whenever  the  funds  of  the  Association  shall  reach  the 
sum  of  five  hundred  dollars  the  Board  of  Directors  shall  cause  the 
weekly  assessment  to  be  suspended  until  the  sum  in  the  treasury  falls 
below  three  hundred  dollars,  when  the  Board  .of  Directors  shall  cause 
the  weekly  assessment  to  be  resumed.  In  the  event  of  the  fund  falling 
below  two  hundred,  dollars  the  Board  of  Directors  shall  cause  the 
assessment  to  be  doubled  until  the  sum  of  two  hundred  dollars  is 
again  reached. 


APPENDICES  413 

SEC.  5.  The  Board  of  Directors  shall  have  the  power  to  change 
the  maximum  fund  as  the  increase  in  the  membership  may  demand. 

ARTICLE  8 

SECTION  i.  A  member  to  be  entitled  to  benefits  must  be  a  mem- 
ber for  thirty  days  before  date  of  sickness. 

SEC.  2.  Any  member  of  the  Association  unable  to  attend  to  his 
duties  must  notify  the  President  or  Secretary  at  once  of  date  and 
cause  of  sickness  or  disability  and  after  the  expiration  of  six  days  from 
date  of  such  notice  the  member  shall  be  entitled  to  receive  from  the 
Association,  if  he  be  a  holder  of  a  full  certificate,  the  sum  of  eighty- 
three  and  one-third  cents  per  day;  and  if  he  be  a  holder  of  a  half  cer- 
tificate he  shall  receive  the  sum  of  forty-one  and  two-thirds  cents  per 
day,  for  every  day  of  his  sickness  or  disability,  Sundays  and  legal 
holidays  excepted,  for  a  period  not  exceeding  twelve  weeks  or  seventy- 
two  days. 

SEC.  3.  Any  member  having  drawn  benefits  for  the  full  term  of 
twelve  weeks  or  seventy-two  days  shall  not  be  entitled  to  further 
benefits  for  sickness  or  disability  until  after  the  expiration  of  six 
months  from  date  of  notification  of  sickness. 

SEC.  4.  Any  member  being  sick  for  two  weeks  or  more  shall 
receive  benefits  from  date  of  sickness. 

SEC.  5.  A  visiting  committee  shall  be  appointed  by  the  President 
in  writing,  whose  duty  it  shall  be  to  visit  any  sick  member. 

SEC.  6.  The  visiting  committee  shall  make  a  report  in  writing 
to  the  President  or  Secretary  at  once  and  said  report  shall  be  signed 
by  each  member  of  the  committee. 

SEC.  7.  The  reports  of  visiting  committees  shall  be  confidential 
in  the  strictest  sense  of  the  word  and  the  Secretary  shall  keep  all 
such  reports  on  file. 

SEC.  8.  For  the  first  week  of  any  sickness  or  disability  the  case 
shall  be  visited  by  the  committee  and  reported  on  as  usual,  but  for  any 
week  or  part  of  week  thereafter  the  member  to  be  entitled  to  benefits 
must  provide  and  forward  to  the  Secretary  in  time  for  the  weekly 
meeting  of  the  Board  of  Directors  a  medical  certificate,  otherwise  the 
case  for  that  week  will  not  be  considered  unless  the  Board  of 
Directors  shall  decide  otherwise. 

SEC.  9.  Any  member  in  case  of  sickness  or  disability  while 
absent  from  city  must,  in  order  to  receive  benefits,  send  a  physician's 
certificate  weekly  so  the  case  can  be  considered  by  the  Board  of 


414  INDUSTRIAL  INSURANCE 

Directors  at  their  weekly  meeting;  if  a  member  should  fail  to  do  so 
he  shall  not  be  entitled  to  benefits. 

SEC.  10.  The  Board  of  Directors  may  employ  some  competent 
physician  to  visit  a  sick  member  should  they  deem  it  necessary,  to 
examine  and  report  the  facts  in  the  case  of  sickness  or  disability 
referred  to  them. 

SEC  ii.  Any  member  being  discharged  or  dropped  from  the  pay- 
roll of  the  Studebaker  Bros.  Mfg.  Co.  Trimming  Department,  may 
retain  membership  as  long  as  he  or  she  is  in  the  city  of  South  Bend, 
Ind.,  and  does  not  engage  in  any  occupation  that  is  any  more  hazard- 
ous than  their  present  occupation. 

SEC.  12.  Members  appointed  to  serve  on  visiting  committee  must 
do  so  unless  excused  by  officer  appointing  them.  All  members  refus- 
ing to  serve  shall  lay  themselves  liable  to  a  fine  of  fifty  cents  for  the 
first  offense  and  one  dollar  for  the  second  offense.  If  he  refuses  to 
pay  such  fines  he  may  be  suspended  from  all  benefits  for  such  a  period 
as  the  Board  of  Directors  may  decide  or  he  may  be  expelled  from 
the  Association  if  the  Board  of  Directors  so  order. 

SEC.  13.  No  benefits  shall  be  allowed  for  chronic  cases — cases 
likely  to  re-occur  from  time  to  time.  The  history  of  the  case  with  or 
without  a  medical  certificate  shall  be  evidence  enough  for  the  Board 
of  Directors  to  determine  the  merits  of  the  case. 

SEC.  14.  No  benefits  shall  be  allowed  for  any  sickness  or  disa- 
bility arising  from  intemperance  or  criminal  or  immoral  acts  on  the 
part  of  any  member. 

SEC.  15.  If  any  member  shall  be  guilty  of  frequenting  saloons  or 
any  disreputable  places  or  found  intoxicated  while  securing  benefits 
from  this  Association  he  may  be  suspended  from  benefits  or  expelled 
from  the  Association  if  the  Board  of  Directors  so  order. 

SEC.  16.  Members  expelled  from  this  Association  cannot  be  again 
re-instated. 

SEC.  17.  Members  dropped  from  the  register  for  arrears  may  be 
re-instated  only  as  new  members. 

SEC.  18.  Members  feigning  sickness  or  disability  or  otherwise 
attempting  to  obtain  benefits  from  this  Association  by  fraudulent 
means  may  be  tried  by  the  Board  of  Directors  sitting  as  a  court  and 
this  court  shall  have  the  power,  if  the  attempt  is  proven,  to  inflict  the 
penalty  of  suspension  from  benefits  or  expulsion  from  the  Association. 


APPENDICES  415 

ARTICLE    Q 

SECTION  i.  All  questions  in  dispute  between  the  Board  of  Direct- 
ors and  the  members  of  this  Association  may  be  settled  by  arbitration. 

SEC.  2.  The  Board  of  Arbitration  shall  consist  of  three  men,  not 
members  of  this  Association. 

SEC.  3.  Any  member  wishing  to  appeal  from  the  decision  of  the 
Board  of  Directors  shall  state  his  case,  in  person,  if  possible,  or  in 
writing,  to  the  President  or  Secretary. 

SEC.  4.  When  an  appeal  is  taken  from  the  Board  of  Directors, 
the  President  shall  appoint  one  arbitrator,  the  aggrieved  one,  and 
these  two  only  shall  appoint  the  third. 

SEC.  5.  The  Board  of  Directors  shall  furnish  the  Board  of 
Arbitration  with  a  copy  of  their  proceedings  in  the  case  in  question. 

SEC.  6.  The  member  taking  an  appeal  shall  furnish  the  Board 
of  Arbitrators  with  a  full  statement  of  his  case  in  writing  and  may 
appear  in  person  or  by  council. 

SEC.  7.  All  decision  of  the  Board  of  Arbitrators  shall  be  con- 
sidered final. 

ARTICLE    10 

SECTION  i.  The  Constitution  and  By-laws  can  be  changed  or 
amended  only  by  a  two-third  majority  vote  of  all  members  present 
at  any  regular  or  called  meeting. 

RULES 
Cushing*s  Manual  shall  be  used  in  governing  all  meetings. 


APPENDIX  M 

THE  UNIVERSITY  OF  CHICAGO  PRESS  MUTUAL 
BENEFIT  ASSOCIATION 

CONSTITUTION 

ARTICLE  I 

SECTION  i.  This  association  shall  be  known  as  'The  University 
of  Chicago  Press  Mutual  Benefit  Association,"  and  shall  not  have 
power  to  dissolve  itself  while  there  are  ten  dissenting  members. 

SEC.  2.  The  object  of  this  association  is  to  establish  a  fund  for 
the  payment  of  benefits  to  sick  or  quarantined  members,  and  a  funeral 
benefit  to  the  family  of  a  deceased  member. 

SEC.  3.  Membership  in  this  association  shall  be  limited  to  the 
employees  of  the  University  of  Chicago  Press  earning  seven  dollars  or 
more  per  week. 

ARTICLE  II 

SECTION  i.  The  elective  officers  of  this  association  shall  consist 
of  a  President,  a  Vice-President,  a  Secretary,  a  Treasurer,  a  Board 
of  Directors  consisting  of  five  members,  one  of  whom  shall  be  the 
President,  ex-officio,  and  a  Committee  on  Membership,  consisting  of 
three  members,  and  shall  hold  office  for  one  year  and  until  their  suc- 
cessors are  elected  and  have  qualified.  Any  vacancy  occurring  shall 
be  temporarily  filled  by  the  Board  of  Directors,  to  take  effect  until 
the  next  stated  meeting;  at  which  time  an  election  shall  be  held  to 
permanently  fill  the  vacancy. 

ARTICLE    III 

SECTION  i.  President:  It  shall  be  the  duty  of  the  President  to 
preside  at  all  meetings  of  the  association  and  to  enforce  order  and  a 
strict  observance  of  the  constitution  and  by-laws;  indorse  all  orders 
of  the  Relief  Committee;  appoint  all  special  and  standing  committees, 
including  a  Relief  Committee,  which  shall  be  appointed  for  each  case, 
and  shall  consist  of  three  members;  fill  all  vacancies  unless  herein 
otherwise  provided;  and  transact  such  other  business  as  may  by 
custom  appertain  to  his  office.  All  reports  shall  be  made  to  him. 
Applications  for  sick  benefits  shall  be  addressed  to  him,  or,  in  his 
absence,  to  the  Vice-President,  and  such  application  shall  be  forth- 

416 


APPENDICES  417 

with  referred  to  a  Relief  Committee,  whose  duty  it  shall  be  to  visit 
the  applicant  and  report  upon  his  case  at  once.  The  President  shall, 
ex  officio,  be  a  member  of  the  Board  of  Directors  and  of  each  standing 
committee. 

SEC.  2.  V ice-President:  The  Vice-President  shall,  in  the  absence 
of  the  President,  perform  the  duties  and  possess  all  the  powers  of  the 
President. 

SEC.  3.  Secretary:  The  Secretary  shall  receive  all  moneys  paid 
to  the  association  and  turn  them  over  to  the  Treasurer,  taking  his 
receipt  therefor.  At  the  January  meeting  he  shall  make  a  detailed 
statement  of  the  receipts  and  disbursements  of  the  association  and  a 
report  of  all  members  in  arrears  for  dues  or  otherwise.  It  shall  also 
be  his  duty  to  record  the  proceedings  of  the  association  in  a  book  to 
be  especially  provided  for  that  purpose,  to  read  all  papers  addressed  to 
it,  and  notify  members  of  all  special  meetings.  The  books  kept  by 
him  shall  at  all  times  be  open  to  inspection  by  the  Board  of  Directors. 
At  the  end  of  his  term  of  office  he  shall  surrender  all  books  and  papers 
belonging  to  the  association  to  his  successor.  He  shall  receive  all 
applications  for  membership,  keeping  a  record  of  the  same;  and  shall 
turn  such  applications  over  to  the  Committee  on  Membership.  All 
necessary  expenses  incurred  by  him  in  the  discharge  of  his  official 
duties  shall  be  defrayed  by  the  association.  He  shall  be  allowed  such 
compensation  for  his  services  as  may  be  prescribed  by  the  association, 
which,  however,  shall  at  no  time  exceed  10  per  cent,  of  the  current 
income  of  the  association. 

SEC.  4.  Treasurer:  The  Treasurer  shall  be  the  custodian  of  all 
moneys  belonging  to  this  association.  At  the  January  meeting  and 
also  at  the  end  of  his  term  of  office  he  shall  make  a  report  of  all 
moneys  received  and  disbursed  by  him,  and  the  amount  of  all  funds 
on  hand,  loaned,  or  invested.  He  shall  deposit  all  funds  of  the  asso- 
ciation in  a  bank  to  be  designated  by  the  Board  of  Directors,  to  the 
credit  of  the  association,  and  all  checks  against  such  deposit  shall  be 
drawn  on  the  order  of  the  Board  of  Directors  through  the  Secretary, 
and  signed  by  himself  as  Treasurer,  and  countersigned  by  the  Presi- 
dent. He  shall  give  a  surety  bond  to  the  association  in  the  sum  of 
$1,000,  acceptable  to  the  Board  of  Directors,  the  cost  of  such  bond 
to  be  defrayed  by  the  association. 

SEC.  5.  Board  of  Directors:  In  the  Board  of  Directors  shall  be 
vested  authority  to  execute  all  the  by-laws  and  orders  of  the  associa- 
tion, provided,  however,  that  in  all  cases  appeal  may  be  made  to  the 


4i8  INDUSTRIAL  INSURANCE 

association,  which  shall  be  promptly  called  to  meet  in  special  meeting 
as  provided  in  Article  V,  sec.  2,  of  this  constitution.  Such  appeal 
shall  be  in  writing,  addressed  to  the  Board  of  Directors  and  may  be 
made  by  any  member.  The  Board  shall  have  no  option  in  such  case, 
but  shall  forthwith  notify  the  President,  or,  in  his  absence,  the  Vice- 
President,  of  such  appeal.  The  Board  of  Directors  shall  receive  the 
reports  of  the  Secretary  and  of  the  Treasurer  and  certify  to  the  cor- 
rectness of  the  same.  The  Board  of  Directors  shall  have  the  power 
to  levy  an  assessment  on  all  members  of  the  association,  not  exceed- 
ing double  the  weekly  dues  paid,  except  in  case  of  the  payment  of  a 
death  benefit,  the  amount  of  the  assessment  for  which  shall  be  regu- 
lated by  the  by-laws,  at  any  time  the  needs  of  the  association  may 
render  such  acts  advisable  or  necessary;  provided,  however,  that  not 
more  than  one  assessment  shall  be  levied  in  any  one  week. 

SEC.  6.  Committee  on  Membership:  Application  for  membership 
in  this  association  shall  be  acted  on  by  the  Committee  on  Membership. 

ARTICLE    IV 

SECTION  i.  The  election  of  officers  of  this  association  shall  be 
held  at  the  regular  January  meeting  by  ballot. 

SEC.  2.  The  presiding  officer  shall  appoint  two  members  as  tellers 
of  election,  who  shall  receive  and  count  the  votes  in  the  presence  of 
the  Secretary,  who  shall  announce  the  result  to  the  presiding  officer, 
who  in  turn  shall  declare  to  the  association  the  names  of  the  successful 
candidates. 

SEC.  3.  A  candidate  must  receive  a  majority  of  the  votes  cast.  In 
the  case  of  the  Board  of  Directors  the  four  candidates  receiving  the 
highest  number  of  votes  shall  be  declared  elected. 

ARTICLE    V 

SECTION  i.  The  stated  meetings  of  this  association  shall  be  held 
the  first  Monday  in  January,  April,  July,  and  October. 

SEC.  2.  Special  meetings  may  be  called  by  the  President  on  his 
own  motion,  and  shall  be  called  by  him  on  the  request  of  five  members 
in  writing,  or  for  the  purpose  of  deciding  appeals,  as  provided  in 
Article  III,  sec.  5  hereof.  Such  meetings  shall  be  held  on  not  less 
than  twenty-four  hours'  notice,  to  be  posted  in  some  public  place 
accessible  to  the  members  of  the  association. 

SEC.  3.  On  the  death  of  a  member  the  President  shall  immediately 
call  a  meeting  to  make  necessary  arrangements  to  attend  the  funeral 
of  the  deceased. 


APPENDICES  419 

SEC.  4.  Eight  members,  one  of  whom  shall  be  either  the  Presi- 
dent, the  Vice-President,  or  one  of  the  Directors,  shall  constitute  a 
quorum  for  the  transaction  of  business. 

ARTICLE   VI 

SECTION  i.  This  constitution  may  be  amended  at  any  regular 
meeting  of  not  less  than  ten  members  by  a  unanimous  vote,  or  by  a 
two-thirds  vote  if  one  month's  previous  notice  in  writing  of  the 
section  intended  to  be  amended  is  given.  Such  notice  shall  be  addressed 
and  delivered  to  the  Secretary  and  a  copy  thereof  shall  by  him  be 
posted  in  some  public  place  as  prescribed  by  the  by-laws. 

BY-LAWS 

ARTICLE  I 

SEC.  i.  All  applications  for  membership  in  this  association  shall 
be  made  in  writing  and  delivered  to  the  Secretary,  who  shall  refer  the 
same  to  the  Committee  on  Membership. 

ARTICLE  II 

SECTION  I.  Members  of  this  association  shall  be  divided  into  two 
classes  and  shall  pay  monthly  dues  in  advance  to  the  association  on  the 
following  basis : 

Class  A :  Those  earning  $12  or  more  per  week,  10  cents  for  each 
week. 

Class  B:  Those  earning  under  $12  per  week,  5  cents  for  each 
week. 

SEC.  2.  Dues  shall  be  deducted  from  the  wages  of  members  on  the 
first  pay  day  in  each  month  by  the  cashier  of  the  University  Press ; 
and,  in  case  of  an  assessment,  the  Secretary  shall  notify  the  cashier 
of  the  additional  amount  to  be  deducted  over  and  above  the  dues, 
which  shall  be  deducted  from  the  wages  on  the  pay  day  next  succeed- 
ing such  notice.  Any  member  being  in  arrears  for  dues  for  one 
month,  shall  be  considered  as  no  longer  in  good  standing. 

ARTICLE  III 

SECTION  i.  Any  member  in  good  standing  shall,  subject  to  the  pro- 
visions of  this  article,  during  sickness  or  quarantine,  be  paid  benefits 
as  follows:  Members  in  Class  A,  $8  per  week;  members  in  Class 
B,  $4  per  week;  provided,  however,  that  no  sick  benefits  shall  be 
paid  to  any  member  during  sickness  due  to  or  resulting  from  intoxi- 
cation, or  the  use  of  narcotics,  or  any  unlawful  or  immoral  act. 


420  INDUSTRIAL  INSURANCE 

SEC.  2.  No  member  shall  be  entitled  to  benefits  under  the  pre- 
ceding section  unless  he  shall  be  sick  and  incapacitated  from  work 
for  one  week  or  more,  in  which  case  benefits  shall  be  paid  for  the 
entire  period  of  such  sickners,  not  to  exceed  a  total  of  six  weeks, 
provided,  however,  that  notice  of  such  sickness  or  incapacity  has  been 
given  in  accordance  with  the  provisions  of  the  following  section.  In 
no  case,  Jiowever,  shall  more  than  twelve  weeks'  benefit  be  paid  to 
any  one  member  in  any  calendar  year. 

Provided,  that  a  member  who  has  drawn  twelve  weeks'  benefit  for 
the  calendar  year  shall  not  be  eligible  for  future  benefits  until  after 
a  doctor's  certificate  of  good  health  has  been  received. 

If  a  member  carries  other  sick  and  accident  insurance,  making  a 
total  indemnity  in  excess  of  his  regular  wages,  the  association  will 
pay  only  such  portion  of  the  benefit  herein  provided  as  his  regular 
wages  bear  to  the  total  indemnity. 

SEC.  3.  Application  for  sick  benefits  shall  be  made  to  the  Presi- 
dent, who  shall  forthwith  appoint  a  Relief  Committee  of  three  mem- 
bers, whose  duty  it  shall  be  to  visit  the  applicant  and  report  his 
condition  weekly  to  the  Secretary  who  shall  keep  a  record  of  such 
reports.  On  the  recommendation  in  writing  by  such  Relief  Com- 
mittee and  approval  by  the  President  it  shall  be  the  duty  of  the 
Secretary  to  draw  an  order  on  the  Treasurer  for  the  amount  of  sick 
benefits  as  provided  in  Article  III,  sec.  i,  as  the  same  shall  become 
due  and  payable,  and  the  Treasurer  shall  thereupon  pay  the  same  to 
the  member  entitled  thereto,  or  his  order. 

SEC.  4.  In  every  case  when  it  is  possible  the  Relief  Committee, 
before  recommending  the  payment  of  benefits,  shall  require  and  obtain 
a  doctor's  certificate  that  the  'applicant  is  unable  to  work,  and  shall 
file  the  same  with  their  report. 

SEC.  5.  In  case  of  the  inability  of  the  Relief  Committee  to  decide 
as  to  whether  an  applicant  for  benefits  is  entitled  thereto,  the  Presi- 
dent shall  immediately  call  a  special  meeting  of  the  members  of  the 
association  whose  decision  shall  be  final. 

SEC.  6.  No  one  shall  be  entitled  to  benefits  unless  he  shall  have 
been  a  member  of  this  association  in  good  health  for  one  month; 
except  in  case  of  accident,  in  which  case  he  shall  be  entitled  to  bene- 
fits from  the  date  of  such  accident,  subject  to  the  other  provisions  of 
these  by-laws. 

SEC.  7.  An  appeal  may  be  taken  from  any  decision  of  the  Relief 
Committee.  Such  appeal  shall  be  decided  by  a  secret  ballot,  and  a 


APPENDICES  421 

two-thirds  vote  of  those  present  and  voting  shall  be  required  to  reverse 
such  decision. 

SEC.  8.  Members  incapacitated  from  work  may  leave  the  city  on 
receiving  the  sanction  of  the  full  Relief  Committee.  In  such  a  case 
a  doctor's  certificate  as  to  such  member's  condition  shall  be  required 
before  paying  sick  benefits  for  each  week. 

SEC.  9.  In  addition  to  the  sick  benefits  herein  provided  for,  the 
association  shall  pay  the  sum  of  $50  to  the  immediate  family  of  any 
member  dying  while  in  good  standing,  on  proof  of  such  death  being 
furnished,  which  sum  shall  be  devoted  toward  defraying  the  expenses 
of  the  funeral,  and  shall  be  raised  by  means  of  a  pro  rata  emergency 
assessment. 

ARTICLE    IV 

SECTION  i.  The  Treasurer  of  the  association  shall  open  accounts 
for  two  separate  funds,  to  wit:  the  "general  fund,"  and  the  "emer- 
gency fund." 

SEC.  2.  To  the  general  fund  shall  be  credited  the  weekly  dues 
as  paid. 

To  the  emergency  fund  shall  be  credited  all  donations  to  the 
association. 

SEC.  3.  All  benefits  shall  be  paid  solely  from  the  general  fund 
until  the  same  is  exhausted.  In  such  a  case  resort  may  then  be  had 
to  the  emergency  fund. 

ARTICLE  v 

SECTION  i.  Loans  may  be  made  to  members  in  good  standing  out 
of  any  moneys  available  for  such  purpose  in  the  general  fund  if  in 
the  opinion  of  the  Board  of  Directors  a  sufficient  emergency  exists  on 
the  part  of  the  applicant  to  make  such  loan  necessary.  But  no  loan 
shall  be  made  for  a  sum  exceeding  $20  to  any  one  member.  For  a 
loan  not  exceeding  $5  the  borrower  shall  give  an  order  for  the 
amount  on  the  cashier  of  the  University  Press  payable  on  demand 
out  of  his  salary.  For  a  loan  exceeding  $5  a  satisfactory  indorser 
shall  be  furnished,  in  addition  to  giving  the  order  as  aforesaid.  All 
loans  must  be  repaid  within  four  weeks.  Interest  shall  be  charged  at 
the  rate  determined  by  the  Board  of  Directors,  and  shall  be  payable 
in  advance.  No  loan  of  less  than  $i  shall  be  made.  Application  for 
loans  shall  be  made  to  the  Secretary. 

SEC.  2.  All  loans  outstanding  must  be  paid  on  or  before  the  first 
Monday  in  January  and  July.  Any  borrower  failing  to  make  such 


422  INDUSTRIAL  INSURANCE 

payment  shall  be  taken  to  be  no  longer  in  good  standing  and  shall 
thereby  forfeit  all  right  to  the  payment  of  any  benefits. 

SEC.  3.  Any  member  owing  any  borrowed  money  to  the  associa- 
tion at  the  time  he  is  taken  sick  or  is  disabled  by  accident  shall  pay 
interest  on  all  over  $5,  and  reduce  the  principal  of  the  debt  $i 
each  week  until  the  sum  of  such  loan  is  $5,  when  the  running  of 
interest  thereon  shall  cease  until  recovery  and  return  to  work.  The 
Treasurer  shall  deduct  all  interest  due  each  week  on  such  a  loan, 
together  with  the  $i,  as  aforesaid,  from  any  benefit  which  may  be 
payable  to  such  borrower. 

SEC.  4.  Any  member  in  arrears  for  interest  or  principal  for  one 
month  shall  be  taken  to  be  as  no  longer  in  good  standing,  and  shall 
forfeit  all  rights  to  benefits  as  provided  in  these  by-laws  until  restored 
to  good  standing. 

ARTICLE  VI 

SECTION  I.  In  case  of  any  member  desiring  to  withdraw  from 
the  association,  he  shall  give  notice  thereof  in  writing  to  the  Secretary. 

SEC.  2.  No  member  expelled  or. suspended  for  any  cause  shall  be 
readmitted  a  member  of  this  association  except  upon  a  unanimous  vote 
of  all  the  members  of  the  association  present  at  the  meeting;  and  then 
only  upon  payment  of  all  sums  due  by  him  at  the  time  of  such 
expulsion  or  suspension. 

Provided,  that  every  member  drawing  benefits  for  twelve  weeks 
in  any  one  year  shall  stand  suspended  until  reinstated  by  action  of  the 
Committee  on  Membership. 

SEC.  3.  Any  member  of  the  association  may  be  expelled  or  sus- 
pended at  any  stated  or  special  meeting  by  a  majority  vote  of  all 
members  present,  provided,  however,  that  charges  have  been  preferred 
at  least  one  week  previous  to  such  act,  by  delivering  a  copy  of  the 
same  in  writing  to  the  member  himself  and  to  the  Secretary. 

ARTICLE    VII 

SECTION  I.  These  by-laws  may  be  amended  at  any  meeting  of 
not  less  than  ten  members  by  a  unanimous  vote,  or  by  a  two-thirds 
vote  if  one  week's  previous  notice  in  writing  of  the  section  intended 
to  be  amended  is  given.  Such  notice  shall  be  addressed  and  delivered 
to  the  Secretary,  and  a  copy  thereof  shall  by  him  be  posted  in  some 
public  place  on  each  floor  of  the  Press  building. 


APPENDIX  N 

EXTRACTS  FROM  THE  THIRTEENTH  BIENNIAL  REPORT 
OF  THE  BUREAU  OF  LABOR  AND  INDUSTRIAL 
STATISTICS  (1908) 

J.  D.  BECK,  Commissioner ;  M.  O.  LORENZ,  Deputy 

INDUSTRIAL   ACCIDENTS    AND   EMPLOYERS'   LIABILITY   IN    WISCONSIN 

What  would  be  the  cost  if  we  continued  with  the  law  of  negli- 
gence?— Employers'  liability  insurance  costs  now  in  Wisconsin  from 
12  cents  per  $100  of  wages  in  knitting  mills  to  at  least  $9  in  some 
building  operations — an  average  of  50  or  60  cents.  But  it  is  very 
probable  that  this  expense  would  be  increased  in  the  near  future  by 
weakening  the  defense  of  the  employer  in  the  courts.  In  the  railroad 
industry,  the  fellow-servant  doctrine  has  been  abolished  in  this  state 
and  the  doctrine  of  contributory  negligence  has  been  seriously  modi- 
fied. Similar  modifications  are  practically  inevitable  for  other  hazard- 
our  industries  if  the  present  system  of  liability  is  retained.  That 
means  that  the  liability  companies  will  charge  more  and  more  for  a 
liability  policy.  But  in  addition  where  there  is  no  legal  liability, 
employers  are  appealed  to  for  charity. 

One  absurdity  of  our  present  law  is  that  it  says :  A  railroad  brake- 
man  cannot  wholly  be  barred  from  compensation  by  the  defense  of 
contributory  negligence,  but  a  structural  steel  worker  or  a  worker  in 
a  sewer  (both  in  very  hazydous  employments)  can  be  debarred  from 
compensation  by  that  defense.  The  reason  for  this  is  that  the  acci- 
dents in  the  railroad  industry  were  the  first  to  attract  attention.  But 
that  other  classes  of  accidents  are  now  relatively  more  important,  is 
shown  by  the  following  analysis  of  Wisconsin  Supreme  Court  cases 
involving  claims  by  injured  workmen  against  their  employers.  Before 
1890,  three-fourths  were  railway  cases;  since  1890,  less  than  one- 
fourth  are  railway  cases. 


STEAM  RAILWAY 
CASES 

OTHER  INDUSTRIAL 
CASES 

TOTAL 

Number 

Per  cent. 

Number 

Per  cent. 

Number 

Per  cent. 

Before  1890 

Si 
66 

77-2 
27.4 

15 
175 

22.8 

72.6 

66 

241 

100 
100 

117 

38.1 

190 

61.9 

307 

IOO 

423 


424  INDUSTRIAL  INSURANCE 

What  could  be  paid  with  his  money  if  distributed  on  the  insur- 
ance principle?— The  cost  of  the  present  system  would  be  sufficient 
to  inaugurate  a  general  system  of  compensation  if  properly  adminis- 
tered. The  following  estimate,  which  has  been  explained  in  chap,  iii, 
is  made  on  the  basis  of  Wisconsin  accident  statistics : 

To  pay  regardless  of  negligence  for  each  fatal  industrial  accident 
three  times  the  annual  earnings,  and  for  non-fatal  accidents  one-half 
wages  during  disablement  after  the  second  week  up  to  one  year, 
together  with  an  additional  payment  of  $500,  or  less,  according  to  the 
degree  of  the  injury,  to  those  permanently  injured,  and  for  all  cases 
first  medical  aid,  would  cost  at  a  maximum  as  follows  for  manu- 
facturing establishments  reported  in  the  federal  Census  of  7905  for 
Wisconsin. 

Fatal   accidents   at  three  years'   earnings $164,290.80 

Non-fatal  during  total  disability  for  one  year  after  the  first  two 

weeks    at   one-half   wages 83,880.37 

Permanent    disabilty — additional 150,125.00 

Medical  fees,  first  aid  at  $500  per  case 20,525.00 

Administrative    (15    per   cent.) 73,909.62 


Total $492,730.79 

This  would  be  approximately  68.9  cents  per  $100  of  the  wages  bill 
or  $3.25  per  man  per  annum,  employed,  on  an  average.  In  some 
industries  it  would  be  less  and  in  some  more.  If  these  same 
manufacturers  had  been  insured  at  existing  employers'  liability  rates, 
the  cost  would  have  been  about  $416,204.61,  which  is  58  cents  per 
$100  of  wages  or  $2.75  per  man  per  annum.  That  this  last  estimate 
is  a  reasonable  one,  appears  from  the  following  (explained  in  detail 
in  chap,  iii)  :  The  Bureau  received  reports  from  540  establishments 
regarding  their  expenses  on  account  of  industrial  accidents  and  wages 
in  the  year  1906.  This  result  shows  an  average  expense  of  from  53 
to  58  cents  per  $100  of  wages  on  the  wages  bill,  and  from  $2.50  to 
$2.80  per  man  employed.  The  difference  between  the  two  estimates 
of  $492,730  and  $416,204  is  not  enough  to  prevent  the  adoption  of  a 
system  of  workmen's  compensation  on  the  ground  of  expense. 

Moderate  compulsory  liability  or  a  voluntary  co-operative  insur- 
ance fund?  (a)  Compulsory  liability. — The  preceding  suggestions 
would  be  substantially  carried  out  by  the  English  system  with 
the  scale  of  benefits  paid  under  the  act  of  1897.  This  would  mean 


APPENDICES  425 

that  little  further  governmental  machinery  would  be  necessary.  The 
law  would  make  employers  in  certain  occupations  liable  for  a  given 
amount  of  damages  in  case  of  accidents  to  their  employees  without 
regard  to  ordinary  negligence  or  assumption  of  risk,  and  employers 
would  insure  themselves  as  at  present  with  employers'  liability  insur- 
ance companies.  There  are  two  objections  to  this  plan:  first,  as  has 
already  been  suggested,  it  may  be  unconstitutional,  and  second,  it 
would  retain  the  wasteful  system  of  employers'  liability  insurance 
under  competitive  conditions. 

b)  A  voluntary  co-operative  insurance  fund. — Another  plan  for 
embodying  the  preceding  suggestions  would  be  as  follows:  Employ- 
ers and  employees  would  be  allowed  to  make  a  contract  whereby  the 
employer  would  be  relieved  of  the  liability  for  damage  suits  on 
account  of  industrial  accidents  to  his  employees  on  condition  that  he 
paid  into  a  fund,  to  be  managed  by  the  State  Insurance  Commissioner, 
or  some  special  commission,  an  annual  payment  about  equal  to  the 
present  cost  of  employers'  liability  insurance  in  his  industry.  From 
this  fund  workingmen  who  had  entered  the  scheme  would  receive  a 
benefit  (specified  by  law)  in  case  of  injury  regardless  of  negligence 
(except  in  case  of  gross  misconduct)  without  making  any  contribution 
themselves. 

The  state  could  probably  not  guarantee  the  fund  without  an 
amendment  to  the  constitution.  In  other  respects  such  a  solution  of 
the  problem  would  be  similar  to  the  Illinois  Commission  plan, 
explained  in  the  appendix.  It  would,  however,  have  some  advantages 
over  that  plan.  The  expenses  of  administration  would  probably  be 
less  because  part  of  the  administrative  work  could  be  borne  by 
the  state.  Considering  the  public  advantages  of  such  a  system,  the 
state  could  very  properly  contribute  something  in  this  way  indirectly. 
It  would  give  the  state  more  complete  information  regarding  acci- 
dents than  if  it  simply  asked  private  companies  for  reports.  Direct 
state  supervision  of  this  kind  would  inspire  confidence  and  would 
guarantee  fairness  in  the  rates  charged.  .  .  . 

The  conduct  of  liability  insurance  by  private  companies  has 
proved  excessively  wasteful.  As  explained  in  chap,  iii,  they  charge 
about  two  and  one-half  times  as  much  as  they  pay  out  in  losses.  The 
plan  here  outlined  could  certainly  be  managed  for  much  less  than  that. 
The  administrative  expenses  of  the  German  accident  insurance  system, 
as  already  stated,  are  now  13.50  per  cent,  of  total  expenditure,  and 
probably  will  be  less  in  the  future;  and  the  experience  of  Wisconsin 


426  INDUSTRIAL  INSURANCE 

local  fire  mutuals  indicates  that  the  administrative  expenses  of  the 
fund  need  not  be  more  than  15  or  20  per  cent. 

To  promote  economy  and  speed  in  settlement,  use  might  be  made 
of  the  device  employed  by  the  Ocean  and  Accident  Guarantee  Corpo- 
ration, elsewhere  fully  explained,  whereby  the  employer  might  settle 
all  small  cases  immediately  according  to  his  own  interpretation  of  the 
law,  and  be  reimbursed  from  the  insurance  fund  up  to  80  or  90  per 
cent,  of  what  he  paid  out. 

How  the  workman  may  be  encouraged  to  provide  for  himself. 
— It  might  be  made  a  part  of  the  conditions  of  the  organization  of 
the  mutual  insurance  fund  mentioned  in  the  preceding  section,  that 
workmen  who  paid  additional  premiums  (either  directly  or  by  having 
them  deducted  from  their  wages)  into  this  fund,  should  receive 
additional  benefits. 

Or,  it  might  be  advisable  to  separate  these  two  features,  and 
organize  a  system  of  workingmen's  accident  insurance  on  the  plan 
now  being  tried  for  life  insurance  and  annuities  in  Massachusetts, 
through  the  efforts  of  Mr.  Louis  D.  Brandeis. 

By  an  Act  of  the  Massachusetts  legislature  in  1907,  savings  banks 
are  permitted  to  establish  departments  for  the  issue  of  life  insurance. 
These  departments  (two  of  which  having  been  organized  at  the  present 
time)  are  to  be  conducted  at  a  minimum  expense,  no  solicitors  being 
allowed.  The  waste  in  industrial  insurance  as  now  conducted  by 
private  companies  is  very  great.  It  is  the  thought  of  this  Massa- 
chusetts plan  to  supply  good  insurance  at  a  low  price  to  those  who 
want  it.  It  is  only  when  such  an  opportunity  is  offered  that  one  can 
reasonably  adopt  the  principle  of  "let  each  man  look  out  for  himself." 

Similarly  the  attitude,  frequently  expressed,  "Let  each  man  buy 
his  own  accident  insurance  in  the  same  way  that  he  buys  his  fire 
insurance"  will  only  then  be  a  reasonable  one  when  the  workingman  is 
given  an  opportunity  to  buy  this  article  without  feeling  that  he  is 
being  robbed. 

Conclusion. — The  foregoing  considerations  make  inevitable  the 
conclusion  that  the  existing  method  of  settling  the  claims  arising  out 
of  accidents  to  workingmen  while  at  work  can  be  greatly  improved. 
In  some  manner  we  should  introduce  the  idea  of  insurance,  which 
practically  disregards  the  idea  of  negligence.  Perhaps  it  would  be  best 
first  to  test  the  constitutionality  of  making  all  employers  liable  to 
moderate  benefits,  amounting  on  an  average  to  about  as  much  as  they 
would  pay  under  the  present  system,  in  all  cases  of  accidents,  and 


APPENDICES  427 

then  releasing  them  from  the  liability  to  damage  suits  when  these 
benefits  have  been  paid.  But  if  this  is  inadvisable,  it  would  be 
desirable  to  have  permissive  legislation,  as  outlined  in  preceding  sec- 
tions, combining  the  idea  of  encouraging  co-operation  between 
employers  and  employees,  state  supervision  of  insurance  funds  to 
guarantee  fairness,  and  the  opportunity  for  workingmen  to  provide 
adequately  for  themselves. 

In  fact,  a  number  of  bills  might  be  passed,  each  capable  of  stand- 
ing alone,  yet  supplementing  the  others.  Such  bills  would  be  in  sub- 
stance as  follows:  (i)  Extend  the  law  regarding  the  railway  industry 
given  on  p.  84  (chap.  254,  Laws  of  1907)  to  other  employments; 
(2)  give  the  workmen  the  option  of  proceeding  under  the  law  of 
negligence  or  under  a  law  of  compulsory  liability  that  disregards 
negligence,  but  not  under  both;  (3)  provide  for  a  voluntary  co-opera- 
tive insurance  fund  as  above  outlined ;  (4)  require  complete  reports 
from  employers'  liability  insurance  companies.  The  combining  and 
choosing  of  these  plans  is  the  work  of  the  legislator. 


APPENDIX  O 
LAWS  OF  MASSACHUSETTS,  1908,  CHAPTER  489 

An  Act  to  Authorize  and  to  Provide  for  the  Approval  of  Plans  of 
Compensation  for  Injured  Employees. 

BE    IT   ENACTED,    etc.,    ES    f  ollowS  : 

Section  i.  Any  employer  of  labor  may  submit  to  the  State  Board 
of  Conciliation  and  Arbitration  a  plan  of  compensation  for  employees 
in  his  employ,  providing  for  payments  to  said  employees  in  the  event 
of  injury  in  the  course  of  their  employment,  based  upon  a  certain 
percentage  of  the  average  earnings  of  such  employees,  and  without 
reference  to  legal  liability  under  the  common  law  of  the  employers' 
liability  act.  After  examination  of  such  plan  of  compensation,  and  a 
public  hearing  thereon  after  public  notice  thereof,  the  board  of  con- 
ciliation and  arbitration  may,  if  it  considers  the  same  fair  and  just 
to  the  employees,  give  its  approval  thereof  by  certificate  to  be 
attached  to  such  plan. 

Sec.  2.  After  obtaining  the  approval  of  a  plan  of  compensation 
as  set  forth  in  the  foregoing  section,  it  shall  be  lawful  for  the 
employer  to  enter  into  a  contract  with  his  employees  by  which  such 
employees  shall  release  the  employer  from  liability  in  case  of  injury 
in  the  course  of  said  employment  and  accept  in  lieu  thereof  the  com- 
pensation provided  in  said  plan  of  compensation. 

Sec.  3.  Either  parent  of  any  minor  employee  or  the  guardian  of 
such  minor  may  agree  to  said  plan  of  compensation  in  behalf  of  the 
minor.  Such  agreement  shall  be  in  writing  signed  by  the  employee, 
or,  in  case  of  a  minor  employee,  by  either  parent  or  guardian,  in  the 
presence  of  two  witnesses,  of  whom  one  shall  be  an  employee  at  the 
time  of  such  signature. 

Sec.  4.  No  employer  shall  require  as  a  condition  of  employment 
that  any  employee  shall  assent  to  any  plan  of  compensation  or  in  any 
way  waive  his  legal  right  to  recover  damages  for  an  injury  outside 
the  provisions  of  such  plan. 

Sec.  5.  No  contract  under  such  plan  of  compensation  shall  be 
binding  for  more  than  one  year  from  the  date  thereof. 

428 


APPENDICES  429 

Sec.  6.  So  much  of  section  sixteen  of  chapter  one  hundred  and 
six  of  the  Revised  Laws  as  is  inconsistent  herewith  is  hereby  repealed.1 

Sec.  7.  This  act  shall  take  effect  upon  its  passage.  (Approved 
May  5,  1908.) 

This  law  embodies  one  of  the  central  principles  of  the  bill  pro- 
posed by  the  Illinois  Industrial  Insurance  Commission  in  1907,  that 
of  release  of  employers  from  liability  when  they  have  insured  their 
employees  in  a  satisfactory  scheme.  But  in  this  law  the  terms  are 
decided  by  an  administrative  board,  while  in  the  Illinois  bill  the 
legislature  itself  was  asked  to  determine  the  basis.  There  are  other 
differences. 

1  Sec.  1 6  reads  as  follows:  "No  person  shall,  by  a  special  contract 
with  his  employees,  exempt  himself  from  liability  which  he  may  be  under 
to  them  in  their  employment  and  resulting  from  the  negligence  of  the 
employer  or  of  a  person  in  his  employ." 


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